Asuncion - Millionaire businessman Horacio Cartes won Paraguay's presidential election on Sunday, returning his powerful centre-right Colorado Party to power after the left's brief spell ended in impeachment last year.

Cartes won with a 9 or 10 percentage point lead over Efrain Alegre of the ruling Liberal Party, the head of the country's electoral tribunal said.

Alegre conceded defeat while thousands of Colorado Party supporters wearing red shirts and scarves honked horns and blasted music in the capital Asuncion, celebrating their party's return to power after its 60-year reign was interrupted in 2008.

Cartes is a political novice who had never even voted before joining the Colorado Party four years ago.

He has vowed to reform the party, which is notorious for corruption. Its long period in power included General Alfredo Stroessner's  dictatorship.

Cartes had about 46 per cent support and Alegre trailed with about 37 per cent with results in from more than three-quarters of polling stations.

With Cartes as president, Paraguay will have a right-leaning government, bucking the trend in South America where leftists have made steady gains in recent years. Only Colombia and Chile are ruled by conservatives.

Alegre's centre-right Liberal Party took over the presidency after leftist President Fernando Lugo was impeached last June.

Congress ousted Lugo, a leftist and former Roman Catholic bishop, after finding him guilty of mishandling a land eviction in which 17 police officers and peasant farmers were killed.

Some of Paraguay's neighbours likened the two-day impeachment trial to a coup and imposed diplomatic sanctions on the South American nation.

"There was a coup (against Lugo) because he was the only person capable of defeating the Colorado Party after 60 years. And he will be the only one to have done it in another 100 years," said Fernando Franco, 38, who works as a hospital security guard. "The Colorados won't be defeated again."

Nearly 40 per cent of Paraguay's 6.6 million people are poor. The landlocked country relies on soybean and beef exports, but it is also notorious for contraband trade and illicit financing.

One of Paraguay's wealthiest men, Cartes primarily made his fortune in the financial and tobacco industries. Rivals have tried to link him to drug running and money laundering, but he has never been charged with those crimes.

"The accusations made during this campaign have no truth to them, and personally I am very serene," the typically brash and outspoken Cartes told reporters early on Sunday.

Alegre, a more somber politician, led corruption probes in Congress. But his reputation as an honest administrator was undermined by an investigation into whether he misappropriated state funds while serving as Lugo's public works minister.

International observers said they had received no complaints of fraud during Sunday's election.

Paraguay's current president, Federico Franco, was barred by the constitution from running for re-election even though he is just serving out what remained of Lugo's five-year term. He will hand over the presidency in August.