With 99.85 percent of the ballots counted, Bachelet, who previously was president from 2006-10, received 62.2 percent of the vote to Mathei's 37.8 percent, the Santiago Times reported.
More than half of the electorate cast votes, the newspaper said.
Bachelet, 62, campaigned on promises of free higher education and a new constitution.
"I want to thank the young people who have protested for free, public and quality education," Bachelet said. "[Chile needs] a new constitution, born in democracy, which guarantees that in future the majority will never again be silenced by a minority."
Bachelet will succeed President Sebastian Pinera, a professor and businessman she defeated in a runoff in 2006, on March 11. The Chilean Constitution precluded her from running for re-election.
Her victory Sunday signals a hard political turn to the left in Chile.
Matthei wished Bachelet, who had been a childhood friend, a successful term.
"My deepest desire, to be honest, is that [Bachelet] does very well -- no one who loves Chile could wish otherwise," she said. "I'm tired, it has been a long and intense campaign, but I'm serene and at peace. Everything that has happened over these unique intense and historic months has been marvelous."