Nigel Farage is standing down as UKIP leader after failing to win Thanet South.
Talking about his promise to quit if he lost, Mr Farage, said: "I am a man of my word."
However, he did not rule out putting his name forward again in the leadership election in September.
Mr Farage was defeated by almost 3,000 votes, with his Tory rival polling 18,838, while he secured 16,026.
He congratulated the Prime Minister on his win and said there had been "an earthquake" in Scotland with the SNP victory.
Mr Farage argued it was time to change the voting system pointing out his party had won a significant share of the vote but only secured one seat.
The pollster Lord Ashcroft has also pointed out UKIP came second in 118 seats.
Mr Farage said: "There was an earthquake in this election. It happened in Scotland, and I think what you saw were a lot of voters so scared of that Labour-SNP coalition that they shifted towards the Conservatives.
"But I saw another shift in this election and I saw UKIP, the party apparently for the retired old colonels, suddenly the party for people under 30, particularly young working women.
"There is a big change going on in politics, and what is really interesting, we've always believed that Britain needs to get back its democracy.
"We shouldn't be governed from Brussels, but what is interesting is what is happening within our democracy in this country.
"We have a party in Britain who have got 50% of the vote in one of the regions and almost 100% of the seats.
"And we have another party that scored almost as many votes, four million, as well as the European elections last year, that has finished up with one seat in parliament.
"I think the time has come from real, genuine, radical political reform, and it is UKIP who will be the party that leads it."
He added: "On a professional level, I express today a degree of disappointment.
"On a personal level I feel an enormous weight has been lifted from my shoulders. I've never felt happier."
His defeat follows a night of frustration for the party with Mark Reckless - who had been one of the party's only two MPs - also losing in Rochester and Strood.
It leaves the party with just one seat in Parliament - despite it winning the third-highest number of votes across the country.
Douglas Carswell, who held the Clacton seat he was re-elected to after defecting from the Conservative Party in 2014, said around five million people had cast their ballot for UKIP.
But he blamed the first-past-the-post electoral system for the party's failure to secure bigger representation in Parliament.
Mr Carswell, who got 19,642 votes to Tory rival Giles Watling's 16,205, said: "Here, in our part of Essex, people voted UKIP and they got UKIP.
"Yet across the country about five million people will have either voted for UKIP or for the Green Party.
"Those five million people will be lucky to get a tiny handful of MPs in the House of Commons.
"That failure to translate those five million votes into seats is less a reflection of how my party or the Green Party campaigned, rather it tells us how dysfunctional our political system is."
It comes after 12 months during which the party saw unprecedented success in European and by-elections, prompting many to predict they would go on to significantly improve on the two seats they already had in Parliament.
Mr Farage has repeatedly vowed to relinquish his leadership if he fails to win in South Thanet.
Speaking on his way to the count in the constituency, a visibly agitated Mr Farage said: "My congratulations to the Daily Mail and the Sun, they're geniuses, they understand politics completely.
"They think the UKIP vote splits the Tory vote - God help us."
Despite his pledge to step down as leader, comments from both Mr Carswell and deputy leader Paul Nuttall suggested they would try to change his mind if he lost.
Founded in 1993 by members of the cross-party Anti-Federalist League, UKIP was formed with a view to seeking Britain's withdrawal from the European Union.
Its first leader, Alan Sked, resigned following the 1997 General Election due to the number of the members he believed were "racist and have been infected by the far-right".
That perception is one that has dogged the party ever since.
It gained greater prominence in 2004 when daytime talk show host and former Labour MP Robert Kilroy-Silk won election to the European Parliament, before leaving the party later that year following rows with fellow senior members.
Mr Farage, who was one of three UKIP triumphs in the 1999 European Parliament elections, won control of the party in 2006.
He stepped down ahead of the 2010 General Election to stand for Parliament against House of Commons Speaker John Bercow.
The party fielded a total of 572 candidates, but despite 3.1% of the vote, none were elected.
After respectable showings in a by-election and local elections, UKIP enjoyed its most significant breakthrough in the 2014 European Elections - swelling its number of MEPs by 11 to 24.
It won 27.49% of votes - more than any other British party.
Conservative MPs Mr Carswell and Mr Reckless both defected to UKIP in 2014, before both were re-elected in their respective seats - becoming the party's first elected MPs.
Few at that point imagined Mr Farage's party would fail to add to that tally in the national vote little more than six months later.
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