Democrats, meanwhile, are in a nail-biter fight with Hillary Clinton and Bernie Sanders tied.
The victory for Cruz is the first time that the conventional laws of politics have applied to Trump, a billionaire businessman who has built his campaign around the perception that he’s a winner who can bring his unique skills to the White House.
But Trump’s big personality, social media presence and large rallies failed to overcome Cruz’s more traditional approach to Iowa’s retail politics. Cruz spent months touring the state and reaching out to evangelical voters.
The win sets Cruz up as a formidable contender in the delegate-rich, Southern states that crowd the GOP calendar in the coming weeks and offers conservatives hope that one of their own can become the nominee for the first time since Ronald Reagan.
As he claimed victory, Cruz fired immediate shots at both Trump and the party elites who disdain him.
“Iowa has sent notice that the Republican nominee and the next President of the United States will not be chosen by the media, will not be chosen by the Washington establishment,” Cruz said.
But Trump said he’s still confident he’ll win the presidency.
“We will go on to get the Republican nomination and we will go on to easily beat Hillary or Bernie,” Trump told supporters. “We finished second, and I have to say I am just honored.”
Democratic dead heat
Clinton said she was breathing a “big sigh of relief” after the caucuses — even though she was tied with Sanders.
“It’s rare that we have the opportunity we do now — to have a real contest of ideas, to really think hard about what the Democratic Party stands for and what we want the future of our country to look like,” Clinton said in a speech that didn’t explicitly claim victory.
Sanders told a raucous crowd chanting “Bernie, Bernie” that his campaign had made stunning progress in a short period of time.
“Nine months ago, we came to this beautiful state, we had no political organization, we had no money, we had no name recognition, and we were taking on the most powerful political organization in the United States of America.”
“And tonight,” he said, “while the results are still not known, it looks like we are in a virtual tie.”
Casualties in both parties
The caucuses resulted in two casualties — one on each side.
Former Maryland Gov. Martin O’Malley, a Democrat, and former Arkansas Gov. Mike Huckabee, a Republican, both dropped their candidacies after faring poorly.
Rubio happy with his showing
Republican Marco Rubio also had a strong night in Iowa, which could set him up as the best placed potential establishment candidate to take on “outsider” challengers Cruz and Trump.
“This is the moment they said would never happen. For months, they told us we had no chance,” a jubilant Rubio said, as he became the first candidate to appear before the cameras to comment on the results.
“They told me that I needed to wait my turn, that I needed to wait in line. But tonight here in Iowa, the people of this great state have sent a very clear message — after seven years of Barack Obama, we are not waiting any longer to take our country back.”
CNN’s Mark Preston, Chris Moody, Brianna Keilar, MJ Lee, Tami Luhby, Sunlen Serfaty and Holly Yan contributed to this report.
