"Teal" independent Zoe Daniel has claimed victory in the once-safe Liberal stronghold of Goldstein, declaring the result demonstrates that "community can make a difference".
With more than a third of the vote counted, the ABC projected Mr Wilson only had around 40 per cent of the vote and would not be able to win.
Shortly afterwards, Ms Daniel claimed victory over the two-term MP at her campaign headquarters.
"What we have achieved here is extraordinary," the former ABC journalist told supporters on Saturday night.
She paid tribute to feminist activist Vida Goldstein, after whom the inner-Melbourne electorate was named.
"She ran as an independent several times because she was so independent that she couldn't bring herself to run for either of the major parties," Ms Daniel said.
Ms Daniel also thanked Cathy McGowan, the so-called "godmother" of the independents movement, who has stayed politically active through a network supporting independent candidates.
Ms Daniel dedicated her win to her former ABC colleague and trailblazing journalist Caroline Jones, who passed away this week aged 84.
"Caroline was a great mentor to me, she was a special woman from the ABC, a journalist who lifted other women up, including me, and today I'd like to dedicate this victory to Caroline Jones," Ms Daniel said.
She said she planned to "inject some sensible decision making" and empathy, honesty and sincerity into federal politics.
"This moment is a testament to the strength of our democracy," she said.
"I think we have some tests ahead and there's a lot of stuff to fix. But what this says is that community can make a difference."
Victory will unseat two-term Liberal MP Tim Wilson
Goldstein takes in beachside suburbs including Brighton, Sandringham and Beaumaris, and Highett, Hampton and Bentleigh further inland.
It has been held by the Liberal Party since its inception in 1984, with Mr Wilson representing the seat since 2016.
Ms Daniel is one of the so-called "teal" candidates who amassed a grassroots support base and funding from the Climate 200 group. She has campaigned on a platform including climate action, a federal integrity commission and truth in political advertising.
She has described herself as a swinging voter, confirming she voted Labor last election and for Mr Wilson three years before that. Mr Wilson has accused "outsiders" of coming in to try and change the electorate.
Mr Wilson was a policy director at the free-market think tank the Institute of Public Affairs and Australia's Human Rights Commissioner before being pre-selected for Goldstein. He was Assistant Minister to the Minister for Industry, Energy and Emissions Reduction from October 2021.
Mr Wilson was a vocal proponent for the yes vote in the marriage equality plebiscite and proposed to his now-husband in the House of Representatives.
Before the count progressed, Mr Wilson told the ABC he had faced a well-resourced "unholy alliance" of forces that had joined to oust him from office.
"Every election is tough in an electorate but what we've seen is an unholy alliance come together," he said.
"GetUp!, Extinction Rebellion, Labor Party, The Greens, all abandoning their traditional camps to back behind a journalist and frankly, the ABC's given them a dream run as well."
The battle for Goldstein has been controversial since before the campaign officially began, with a battle over corflutes making its way to court in a case Ms Daniel's team ultimately won.
