With 85 percent of the Nevada caucus reported, Clinton led Sanders 52.5 percent to 47.5 percent, winning the third contest of the Democratic race for the party's nomination for president.
Although Clinton's victory in the state was not a surprise, some wondered whether it would happen as polls in the state narrowed from a long-standing double-digit lead to more narrow one in the days leading up to the caucus.
Although Clinton has been expected to win the Nevada caucus for months -- she had a large, double-digit lead in the state several weeks ago -- it shrank as Sanders' national popularity has surged since Christmas.
The win is expected to give Clinton some headwind in the race for the Democratic nomination, with the next primary on February 27 in South Carolina and the 11-primary "Super Tuesday" on March 1 fast approaching.
"I am thrilled and grateful to all of my supporters out there," Clinton said in a speech to her supporters from Caesar's Palace in Las Vegas. "Some may have doubted us, but we never doubted each other."
Clinton took several swipes at Sanders, suggesting he has only has economic plans and that "we aren't a single-issue country."
She worked in the closing days days to gain support in Nevada, going after casino and hotel workers especially -- who she thanked for coming out to support her in the caucus during her speech.
Clinton also carried leads among African-American and union voters, as well as "self-identified Democrats," boosting her past Sanders strong support among Latin and younger voters. White voters were split relatively evening between the two candidates, according to caucus entrance polls.
Nevada's delegates are split proportionately, which will add 18 to 20 delegates to Clinton's already sizable lead 501-to-69 lead over Sanders. The party requires 2,383 delegates for a candidate to win the nomination.
Sanders said in a statement shortly after congratulating Clinton on her victory, the Senator said he was proud of his campaign's performance in Nevada. He pointed specifically to the progress made during his nine month campaign, talking about momentum and closing a 25 point gap in the polls between him and Clinton.
"What this entire campaign has this been about is the issue of momentum, of bringing more and more people into the political process," Sanders said in the speech. "I believe on Super Tuesday, we have got an excellent chance to win many of those states. It is clear to me and most observers that the wind is at our backs. We have the momentum and I believe that when the Democrats assemble in Philadelphia in July at that convention, we are going to see the results of one of the great political upsets in the history of the United States."