The 45-year-old emergency room doctor captured almost 55 per cent of the 8,640 votes cast in party balloting Saturday to become the new leader of the Alberta Liberal Party.
"Today Team Raj becomes Team Alberta tomorrow," Sherman told more than 100 party faithful who cheered the final results when they were announced Saturday in the main gym on the University of Alberta campus.
"Tonight we will celebrate. Tomorrow we focus on renewing and rebuilding the Alberta Liberal Party."
Sherman defeated four other candidates in the contest to replace leader David Swann.
He captured 4,684 votes — more than the required 50 per cent plus one of the votes on the first ballot.
Edmonton Liberal legislature member Hugh MacDonald was second, with 2,239 votes — 26 per cent of the total ballots cast.
Fellow Edmonton Liberal MLA Laurie Blakeman was third. She took 854 votes, almost 10 per cent of the total.
Calgary businessman Bill Harvey gained 626 votes (7.3 per cent) while southern Alberta carpenter and union organizer Bruce Payne was last with 197 votes (2.3 per cent).
The contest was announced after Swann announced in February he was resigning as leader. However, Swann plans to still run as a legislature member in the riding of Calgary-Mountain View.
A general election is expected to be called next spring, but could come as early as this fall.
The governing Progressive Conservatives will hold a party vote in the coming weeks to replace Premier Ed Stelmach on Oct. 1.
Sherman campaigned on a platform of pushing the Tories to fix long wait lists and substandard care in the health system.
He joined the Liberal Party earlier this year after he was ejected from the government caucus for criticizing the premier and others for failing to implement health reforms to reduce long waiting lists for care.
Party rules prevented him from joining caucus until he runs under the party banner in a general election. However, there is a provision in the party rules that allow him to join caucus if caucus members vote to OK it, and that's expected to happen soon.
He is the second floor-crossing Tory to head the party in the last decade.
The Liberals were led by former Tory health minister Nancy MacBeth when they were routed in the 2001 general election.
This leadership race was a groundbreaking contest.
The 8,640 who voted were almost double the 4,500 who cast ballots in the 2008 contest that catapulted Swann to the leadership.
In that contest, only paid party members could vote, while this time the Liberals allowed anyone to sign up for free and vote as a designated party "supporter."
The party said about 27,000 registered to vote.
More than half of those were signed up by Sherman's team through an automated "demon dialler" phone fan out, in which respondents would answer the phone to hear a recorded message and then, if they so desired, could punch a number to sign up.
Sherman implored his constituents this week to get the vote out as it appeared a lot of the demon dialer respondents were not casting ballots.
MacDonald and Harvey complained about the process, saying that some of those signed up either weren't eligible, or were eligible but didn't even know they'd signed up.
Membership lists were challenged as well.
In the last week MacDonald and Harvey complained when 100 names that had previously been left off a Sherman voting list were added after the deadline.
Sherman's team challenged the party's decision last month to prematurely distribute to other candidates a list of Sherman supporters.
Sherman now faces a challenge of building a party that sits as the official Opposition but is seeing time and political tides turning against it.
The party has eight members in the 83-seat legislature but its support in recent popularity polls has been eaten away by the left-centre NDP and the upstart centrist Alberta Party.
The Liberals haven't held power in Alberta for 90 years.
While the Liberals remain the official Opposition, the possibility of vote splitting with the NDP and Alberta Party, along with a surging right-of centre Wildrose Party, put it at risk of falling to third-party status after the next election.
That would relegate it from front and centre to the a corner of the legislature. Also, it would suffer a critical loss in research funds, question time, and media exposure that comes with official Opposition status.
There will be 87 ridings in the next general election, but so far only 10 Liberal candidates have been confirmed. Party executive director Corey Hogan said non-incumbent party nomination battles were put on hold pending the leadership outcome and that another 43 candidates are ready to go.
Hogan said the party has about $30,000 in the bank despite a leadership contest that cost $90,000.
Before the results were announced, Swann urged supporters in the gym to unite behind the new leader, bluntly adding that the Liberal party as it exists today doesn't deserve the trust of Albertans.
"I'm here to tell you that we'll never form government — in fact we don't deserve to form government — until we take a long, hard look at ourselves and our actions," said Swann.
"All of us share the responsibility for where we are today."
He said the Liberals remain the best option for voters with its combination of fiscal pragmatism and social liberalism.
"Without strong alternatives, democracy will wither," said Swann.