With 98 percent of precincts reporting, Obama led the former first lady 55 to 27 percent, with former senator John Edwards third at 18 percent, exit polls showed.
Among blacks, Obama held a whopping 81 to 17 percent edge over Clinton.
The South Carolina vote marked a second key victory for the Illinois senator and evened the score with Clinton, who has also won two key state primaries ahead of a blitz of nearly two dozen nationwide contests on February 5.
In his victory speech, Obama highlighted the differences between himself and Clinton, painting her as a representative of the "status quo" as his cheering supporters chanted "We want change," and "Yes, we can!
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"There are real differences between the candidates. We are looking for more than just a change of party in the White House. We are looking to fundamentally change the status quo in Washington," Obama said.
"It's a status quo that extends beyond a particular party and that status quo is fighting back with everything its got