With 435 of 462 precincts reporting, Labrador collected 48.1 percent of the vote compared to 38.8 percent for Ward, who described the race as "a humbling experience."
Ward was an early front-runner in the primary race, built a six-to-one fundraising edge and was designated as one of the National Republican Congressional Committee's top 23 recruits in its "Young Guns" candidate development program.
"I called Raul Labrador and congratulated him on his victory and will support him in his effort to reclaim this seat for the GOP in November," he told The Associated Press.
Palin came to Idaho on Friday to raise money for Ward and give a jolt to undecided voters in the 19 western counties that make up only one of two congressional districts in the state.
The current icon shows Polistra using a Personal Equation Machine.