Maria Luise Mathiaschitz beat incumbent mayor Christian Scheider (FPÖ) in a run-off vote, winning back the seat for the SPÖ after 42 years. It’s also the first time that Klagenfurt has elected a female mayor.
A total of 41,745 votes were cast, with Scheider winning 46.69 percent.
Mathiaschitz, a 58-year-old doctor, has said she intends to form a coalition with the ÖVP and the Greens, to ensure a stable majority.
In a press release Carinthia’s SPÖ governor Peter Kaiser spoke of a "historic victory" for the Social Democrats. Chancellor Werner Faymann and SPÖ national manager Norbert Darabos said in a press release it was a "great result" and "a great day for Carinthian social democracy".
Carinthia, Austria’s poorest province, faces possible bankruptcy after acting as a guarantor on loans for defunct lender Hypo Alpe Adria.
The financial mess has been blamed on the state government under Jörg Haider, the Freedom Party leader who died in a 2008 car crash.
The debt guarantee amounts to €10.2 billion - five times Carinthia's annual budget.
There is no precedent for a province going bankrupt, so it is unclear what lie ahead for the region, with its population of about 500,000.