Jill Long Thompson defeated Indianapolis architect Jim Schellinger by fewer than 10,000 votes in a tight race for the Democratic nomination for governor.
She will face Republican Governor Mitch Daniels in November.
Schellinger had an early fund-raising advantage and backing from some big-name state Democrats, but Long Thompson ultimately had better name recognition.
She will likely head into November's race at a financial disadvantage against the well-funded Daniels, who had no primary opponent.
Party officials hope that voter displeasure with some of the first-term governor's changes will bolster the Democratic nominee.