The Overs singer beat Nicholas McDonald to be crowned this year's champion following tonight's (December 15) head-to-head final at Wembley Arena in London.
Tonight's result gives Sharon Osbourne her first victory as a mentor, following her return to the series earlier this year.
Dermot O'Leary revealed that the 36-year-old received over 1 million votes from the public this weekend.
Bailey said: "I don't know what to say. I just want to say that I love that boy [Nicholas] to pieces and he needs to get an album out as well. He's got an amazing voice and I love him to death."
"I can't believe this. I'm so grateful to everybody. I really am appreciative, thank you," she added.
McDonald told O'Leary: "If I was going to get beaten by anybody it was going to be Sam. Sam is a hard one to beat, but I just want to say thank you to every single person who has voted for me week in and week out.
"This is not the end of me," he promised. "I know I'll have an album out and I'll see you all on the tour. I love you all."
Speaking on The Xtra Factor, Bailey continued: "I just feel so overwhelmed by all the support and everything. It's twenty years I've waited for something like this; to get the recognition that I've always wanted.
"These guys all behind me, we've had ten amazing weeks together and every single one of them deserves to be successful. They're all really professional and I've loved every second of this experience."
Asked how proud she is, Osbourne replied: "I can't even begin to tell you. I want to thank everybody who has shown Sam so much love and support, and every week they have voted for her.
"Especially Lord Sugar who has been there from day one. God bless you, sir. Thank you to everyone."
Both Bailey and McDonald took to the stage to perform two songs tonight - their favourite song of the series, and what could become their winning singles.
Bailey covered Jennifer Rush's 'The Power of Love', which she performed on the first live show of the series in October. She then performed Demi Lovato's 'Skyscraper', which will serve as her debut single.
McDonald chose Sarah McLachlan's 'Angel' as his favourite song from the series, before performing Five for Fighting's 'Superman' as his potential debut release.
All of this year's finalists returned to perform Perry's number one single 'Roar' at the beginning of the show.
The grand final also featured performances from Sir Elton John and Gary Barlow, One Direction and Katy Perry, who performed her latest single 'Unconditionally'.
Sam Bailey will now join Beyoncé on the UK leg of her 'Mrs Carter Show World Tour' in February.
The X Factor: Sam Bailey's journey