The Japanese capital won a majority of second-round votes from International Olympic Committee (IOC) members in Buenos Aires to beat Istanbul.
Madrid had earlier been eliminated in a first round of voting.
The announcement was met with jubilant scenes in Japan, as Tokyo prepares to host the event for the first time since 1964.
When IOC president Jacques Rogge - who will retire after 12 years in the role on Tuesday - announced the winning city, members of the Tokyo delegation jumped to their feet in celebration waving the Japanese flag.
The decision means Tokyo will become the first Asian city to host the Games twice.
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