Blanchard, 61, a former Vision Montréal member and the head of the city's executive committee, was elected by secret ballot, beating out Harout Chitilian 30 votes to 28.
Deputy Mayor Jane Cowell-Poitras was a distant third, with three votes.
Two other contenders, St-Laurent borough mayor Alan DeSousa and Rosemont–la-Petite-Patrie borough mayor François Croteau, withdrew their candidacy just before council was set to vote.
What's your advice for Montreal's mayor?
"I hope everyone rallies around the municipal council's decision," said Blanchard immediately after the results were announced. "What's ahead, for me in particular, is a great challenge."
"It's also breathtaking, exhilarating, scary. However, I can console myself with the reminder it's only for four months."
Seeks cooperation, balance in months to come
Thanking his wife Claudine, his son and his sisters in the moments after his swearing-in in the Hall of Honour at Montreal city hall, Blanchard's voice caught in his throat, and he struggled briefly for composure.
"I thank you for your confidence in me," he told his colleagues on council, the city manager and the entire civil service — promising to do his job for the next several months with stability, integrity and continuity.
Blanchard said he is recommending that Projet Montréal councillor Josée Duplessis — the executive-committee member responsible for sustainable development, the environment and parks — replace him as the head of that committee.
"She is known for her leadership and spirit of collaboration with her fellow colleagues," Blanchard said.
That recommendation must be approved by city council.
Blanchard said he will delegate other files he is now in charge of to other sitting members of the committee.
"The current members of the executive committee are extremely competent and know their dossiers very well, which is crucial, as the city must continue to function," he said.
Opposition leaders rally around Blanchard
Shortly after the results of the vote were announced this morning, former speaker Harout Chitilian congratulated the new mayor for having done a "remarkable job" and promised to work with him.
Vision Montréal leader Louise Harel was ecstatic, calling Blanchard a "unifying force" who will ensure stability at City Hall.
She said his election "is the demonstration that this coalition running Montreal is capable for a second time of getting the city out of the crisis in the aftermath of Michael Applebaum's arrest."
Projet Montréal leader Richard Bergeron also extended his congratulations to Blanchard.
"What we want above all else, in the interest of Montrealers, is the continuation of a peaceful transition [to November's election]," Bergeron said, explaining why his candidate, François Croteau, made a last-minute decision to withdraw from the race.
'Above suspicion,' says Bergeron
Bergeron said he has complete faith in Blanchard's political integrity.
"We have nothing to fear," Bergeron said. "Laurent Blanchard is really above all suspicion."
Blanchard, who now sits as an independent, represented the borough of Mercier-Hochelaga-Maisonneuve.
As mayor of the city, he also becomes mayor of Montreal's central Ville Marie borough.
The post was left vacant last week after Applebaum resigned from his post in the wake of his arrest on corruption-related charges.
The special council meeting to elect an interim mayor started at 9:30 a.m. with a citizens' question and answer period. Each candidate had 20 minutes to speak before council votes by secret ballot.
Applebaum, who ascended to the post with a vow to tackle misdeeds at city hall, was only in the job seven months before he was arrested by the province's anti-corruption unit (UPAC) and charged with 14 offences. He maintains his innocence and insists that his name will be cleared.
Last November, long-time mayor Gerald Tremblay resigned amid mounting pressure and accumulating allegations about collusion and corruption in his Union Montreal party.
Tremblay has not been charged criminally and also maintains that he did nothing wrong.