Cantor, the No. 2 Republican in the House of Representatives, was easily beaten by college economics professor David Brat, who had argued Cantor had betrayed conservative principles on spending, debt and immigration.
Cantor had been seen by many as an eventual successor to House Speaker John Boehner, and his loss eventually will mean a shake-up in Republican leadership among House members already nervous about the depth of public anger toward Congress.
With nearly all precincts reporting, Brat had about 56 percent of the vote to Cantor's 44 percent.
A seven-term congressman, Cantor had spent more than $5 million to head off the challenge from Brat, a political newcomer who teaches at Randolph-Macon College. Brat spent about $122,000, according to the Center for Responsive Politics.
The result is likely to halt any efforts to craft a House immigration reform bill, as nervous Republicans hustle to protect themselves against future challenges from the right ahead of the Nov. 4 midterm elections. It could also make Republicans even more hesitant to cooperate with President Barack Obama and Democrats for fear of being labeled a compromiser.
"We all saw how far outside the mainstream this Republican Congress was with Eric Cantor at the helm, now we will see them run further to the far right with the Tea Party striking fear into the heart of every Republican on the ballot," said U.S. Representative Steve Israel of New York, who heads the House Democratic campaign committee.
The victory emboldened conservative leaders who had seen a string of primary losses by Tea Party candidates this year to candidates backed by the Republican establishment, and it could encourage a conservative challenge to Boehner at the end of the year when the new leadership team is chosen.
"Eric Cantor's loss tonight is an apocalyptic moment for the GOP establishment. The grassroots is in revolt and marching," said Brent Bozell, a veteran conservative activist and founder of the Media Research Center.
Brat had repeatedly attacked Cantor for voting to raise the debt ceiling and accused him of supporting some immigration reform principles. In response, Cantor had sent voters a mailer boasting of his role in trying to kill a House immigration bill that would have offered what he called amnesty to undocumented workers.
U.S. Senator Lindsey Graham of South Carolina also faced a Tea Party challenge on Tuesday but he beat a crowded field of six challengers who had accused him of not being conservative enough.