Scott Walker won 53% of the ballot in an election engineered by opponents of his plan to limited workers’ collective bargaining rights in the state.
More than 900,000 called for the vote after angry protests over the reforms.
Republicans have suggested the result may carry significance ahead of November’s presidential election.
The state has backed the Democrats in every election since 1988.
“Tonight’s results will echo beyond the borders of Wisconsin. Governor Walker has shown that citizens and taxpayers can fight back – and prevail – against the runaway government costs imposed by labor bosses,” Mr Romney said.
Jonny Dymond BBC News, Washington
There should be a good-sized health warning over the result of Wisconsin’s bitterly contested recall election. The lopsided campaign spending – 7-to-1 in favor of the Republicans – was peculiar to this race. The passion was peculiar to the politics that Scott Walker introduced in 2010.
But Republicans will be delighted by the result and Democrats will be downcast. Wisconsin has been Democratic territory since Ronald Reagan left office. Now it cannot be taken for granted by the Obama campaign. Momentum is important in politics, and Wisconsin’s Republican have the wind in their sails.
And remember what started all of this? Scott Walker trod where few others were prepared to go – attacking public sector unions and forcing public sector employees to yield up what looked to many to be very comfortable healthcare and pension deals.
The recall election was a shot not just across Scott Walker’s bows but also those of like-minded Republican governors. It missed, and the US labor movement must wonder what comes next.
However, the BBC’s Jonny Dymond in Washington says recall elections are not the same as presidential contests, and the arguments in Wisconsin are peculiar to the state.
With almost all of the votes counted, Mr Walker had more than 53%.
“Tonight, we tell Wisconsin, we tell our country and we tell people all across the globe that voters really do want leaders who stand up and make the tough decisions,” he told supporters in his victory speech.
His Democrat challenger, Milwaukee Mayor Tom Barrett, was trailing with just over 46% and had admitted defeat.
Voter turnout in Tuesday’s election was high.
One voter, Roberta Komor of Wauwatosa, told Reuters that she had voted for Mr Barrett when he ran in 2010, but switched her vote this time, saying unions “need to learn about shared sacrifice”.
Mr Walker is only the third governor in US history to face a recall vote and the first to win.
His reform of the public sector – forcing employees to contribute more towards healthcare and pensions and stripping public sector unions of collective bargaining rights – set off a weeks of angry protests.
But he was aided by huge sums from big business and strong organization on the ground, our correspondent says.
Tom Barrett speaks to reporters after casting his ballot in Milwaukee, Wisconsin 5 June 2012
Wisconsin is seen as one of a handful of swing states that could be especially important in determining the outcome of the presidential election.
The state has voted Democratic in the last six presidential elections, and in 2008 Barack Obama carried Wisconsin with a 14% margin.
At the very least, Mr Obama can no longer take it for granted as he might have done before Tuesday’s vote, our correspondent says.