Mahathir, a 92-year-old former prime minister who led the country as head of the ruling Barisan National coalition for 22 years until 2003, has now done the almost unthinkable and led the opposition Pakatan Harapan (Alliance of Hope) to victory.

In the 61 years since independence, this is the first time the opposition has ever won an election in Malaysia, marking the end of one-party rule.

In victory, Mahathir has blasted out of office the man he once mentored, Prime Minister Najib Razak. He becomes one of the oldest people to ever be elected to lead a nation.

First, however, he had to wait as Malaysia's political system grappled with the reality of their first change of government.

Mahathir arrived at the Istana Negara (State Palace) at about 4.40pm, Malaysian time, for his swearing in by the King of Malaysia.

The king spoke to each of the four leaders of the other parties in Mahathir's coalition, ensuring a new coalition government could be formed, before finally swearing in Mahathir after 9.30pm.

The delay prompted rumours to spread on social media that the swearing in would be delayed, or would not happen at all, underscoring fears that Najib would attempt to game the system, split the coalition, and hang on to power.

The Palace sternly dismissed suggestions it had delayed Mahathir's return to the power - this time as a symbol of change in the country he once ruled with an iron fist - and said the king "strongly supports and respects the democratic process and the wishes of his subjects".

Finally, it was done.

Late on Thursday, more than 30 hours after polls closed and Mahathir first claimed victory, while warning his predecesor against "hanky panky" that could deny the will of the people, Mahathir addressed the nation as its leader, once again.

"Nobody in Malaysia had ever seen the kind of support for Pakatan Harapan," he said.

"Finally we had enough people with the guts who stand by us, support us. We were cut off from sources of funds, but some people surreptitiously gave us money."

"We lost the flag war [against the government] completely... we were thinking we would perhaps achieve 100 seats in the Peninsula [on the west coast of Malaysia, where 80 per cent of the population lives] and a number of seats in Sabah and Sarawak."

Instead, the opposition had secured a parliamentary majority of more than 120 seats.

Policy-wise, Mahathir reassured business people "we intend to build up Malaysia’s economy with the help of investors inside and outside the economy... we would like to see an active stock market".

He again promised to pursue money stolen through the 1MDB sovereign wealth fund scandal - an ominous warning to Najib - but insisted in an earlier press conference that he was not seeking "revenge" on Najib and would follow the rule of law.

He said the new coalition government would meet tomorrow to discuss cabinet posts.

The final press conference concluded just before midnight and came after a dramatic day during which the outgoing prime minister said he would "accept the verdict of the people", but stopped short of conceding defeat.

Najib said Malaysia's king would decide who the next prime minister would be. And he did.

Flanked by the leaders of the opposition coalition including Wan Azizah Wan Ismail, Mahathir declared before his visit to the king that the Pakatan Harapan opposition coalition had secured more than 135 members in the 222 member parliament and "there can be no doubt about who gets majority support in the new Malaysia".

No single member of the Pakatan Harapan coalition won a simple majority. Wan Azizah's PKR (Justice) party won the largest number of seats, 104, within the coalition. She is the wife of jailed former opposition leader and deputy prime minister, Anwar Ibrahim.

Mahathir's return to the prime ministership caps a remarkable series of events in Malaysia.

The result dumbfounded most analysts and turned the country’s political system on its head as after decades of one-party rule, the Muslim-majority nation delivered a resounding vote for change.

Mahathir's return to power was preceded by this decision to come out of retirement and teaming up with Anwar Ibrahim - who served as his deputy prime minister in the 1990s, before the pair fell out spectacularly and Anwar was jailed on trumped-up sodomy charges.

The Prime Minister-elect has promised to stand aside for Anwar (who is serving the final days of a jail term on specious sodomy charges) to become Prime Minister. In his final press conference on Thursday, he didn't say when he would stand aside.

More importantly, seeking a royal pardon for Anwar would be one of the first things the new government did, he said.

In the early hours of Thursday morning after the declaration of the results, Malaysians took the streets of Kuala Lumpur, car horns blaring and flags waving as the nation of 31 million people celebrated a historic victory.

A GST imposed by Najib was widely cited by many Malaysians Fairfax Media spoke to for the unpopularity of the Barisan Nasional government.

Some also raised questions over the hugely expensive East Coast Rail Link, a 55 billion Ringgit ($19 billion) project largely funded by China as part of its Belt and Road Initiative.

Mahathir said again the incoming government wanted to review that project, but that he did not oppose Belt and Road in-principle.

For the outgoing prime minister Najib, Mahathir's comments about the state-owned 1Malaysia Development Berhad (1MDB) sovereign wealth fund scandal raise the prospect of legal difficulties ahead.

As much as $US4 billion has allegedly been misappropriated from the fund in the scandal and the United States, Swiss and Singaporean governments are among those investigating.

Najib has always denied allegations of corruption from the US Department of Justice over the transfer of $US681 million into his personal account from the fund as part of the scandal.

The country's former Attorney-General had cleared him of any wrongdoing, claiming the money was a gift from Saudi Arabia's royal family and that most of it was returned.

Many Malaysians want Najib prosecuted and jailed over the matter.

The new deputy prime minister, Wan Azizah, told Fairfax Media the opposition had hoped at best for a hung parliament.