Centeno, the overwhelming favorite, came out on top after two rounds of voting among his peers and will officially succeed Dutchman Jeroen Dijsselbloem on Jan. 13. His term as eurogroup president will last for two and a half years.
Following his victory, Centeno said he hoped to promote "inclusive" growth policies that will help "put an end to a period that was very difficult for Europe." Other priorities include bolstering the resilience of the eurozone, he said.
"We have a very unique time window to further prepare our economies and our societies better," Centeno said after seeing off the challenge from Luxembourg's Pierre Gramegna, Slovakia's Peter Kazimir and Latvia's Dana Reizniece-Ozola.
Centeno will take the helm at an opportune time. Whereas Dijsselbloem's five years in the post were marked by crises largely centered on cash-strapped Greece, Centeno's tenure starts off in relatively benign conditions. The eurozone economy is growing strongly, while worries over Greece's future in the bloc have subsided with the country poised to exit its bailout era next summer.
"We are facing different challenges today from the ones we faced a couple of years ago," he said.
Centeno's victory has the potential to symbolize a new era for the eurozone, all the more so as he comes from less-wealthy southern Europe. While eurozone governments still insist that countries must keep their public finances in shape, there's a greater acknowledgement that the austerity of the past few years has taken a heavy toll on people, particularly in countries like Portugal and Greece.
"We are confident this will represent a turning point for the future development of the eurozone and for the whole of Europe," said Gianni Pittella, leader of the S&D Group in the European Parliament. "We are finally overcoming the era of blind and stupid austerity that has left behind even more poor and divided societies across Europe."
One of those societies is Portugal. The country was one of four eurozone countries, along with Greece, Ireland and Cyprus, that had to be bailed out during the region's debt crisis. In 2011, Portugal required a 78-billion-euro ($93 billion) rescue after its budget deficit grew too large and international investors asked for hefty premiums to lend to the government.
In return for the financial lifeline offered by its partners in the eurozone and by the International Monetary Fund, the then center-right Portuguese government had to enact a series of spending cuts and economic reforms. Portugal exited its bailout program in 2014.
While the austerity strategy had the desired effect of putting Portugal's annual budget into better shape, the austerity demanded by creditors accentuated a deep recession and sharply raised unemployment. Following a backlash against austerity, the Socialist Party came to power in late 2015, with Centeno, a former Bank of Portugal analyst, taking the post of finance minister.
Centeno, who has eased up on austerity in Portugal by pushing more growth-oriented policies, said his aim would be to "generate consensus" among eurozone countries in the "challenging" period ahead.
As well as overseeing the end of Greece's bailout era, Centeno's agenda is likely to be taken up improving the eurozone's architecture. The debt crisis of the past few years clearly exposed the failings of the euro's construct.
Though a series of reforms, such as stricter controls on budgets, have made the eurozone more viable, there is a widespread belief that more needs to be done to prevent a repeat of the recent debt crisis. Achieving a consensus on how to do that is likely to be a key part of Centeno's work.
"This is the only way Europe has advanced in the past," Centeno said.
Achieving consensus isn't easy given that the governments of the eurozone come from a variety of political traditions with differing mandates and economic agendas.
Dijsselbloem, whose Labor Party fared poorly in Dutch elections this year and is no longer part of the coalition government in the Netherlands, was considered a skilled operator in bridging differences and maintaining a consensus, particularly over austerity.
That was especially the case during the Greek crisis of 2015, which saw the country nearly crash out of the euro before the newly elected left-led government in Athens agreed to a last-minute international bailout.
Dijsselbloem's advice to his successor was to keep the eurogroup "together and united" and to urge countries that use the euro to be wary of complacency in light of the recent economic upturn, which is expected to see the region grow at a decade-high rate.
"Particularly in this time, it's very easy to lean back and relax," he said.
Pylas reported from London.
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