With 87% of votes counted in a rare recall election, he has 54% compared to 45% for Democratic challenger Tom Barrett, who has now admitted defeat.
The rare recall poll in the mid-western state was forced by opponents of a law passed by Mr Walker that limited workers' collective bargaining rights.
The poll is seen as a key test ahead of November's presidential elections.
Politicians are watching closely for signs that a state that backed President Barack Obama in the last presidential election in 2008 may be tipping more towards Republicans, the BBC's Jonny Dymond in Washington says.
Republican presidential nominee Mitt Romney, who will be challenging President Barack Obama, was quick to congratulate Mr Walker.
"Tonight's results will echo beyond the borders of Wisconsin. Governor Walker has shown that citizens and taxpayers can fight back - and prevail - against the runaway government costs imposed by labour bosses," Mr Romney said.
However, recall elections are not the same as presidential contests, and the arguments in Wisconsin were peculiar to the state, our correspondent says.
Key swing state
Voter turnout in Tuesday's election was high, correspondents say.
Roberta Komor of Wauwatosa told Reuters that she had voted for Mr Barrett when he ran in 2010, but switched her vote this time, saying unions "need to learn about shared sacrifice".
Andrew Karls, a Barrett supporter, said he did not expect the Milwaukee mayor to win, but believes enough of the recalled senators will lose, flipping control of the Wisconsin Senate to Democrats.
Mr Walker's lieutenant governor, Rebecca Kleefisch, and three Republican state senators also won recall votes on Tuesday.
Mr Walker is only the third governor in US history to face a recall vote and the first to win.
His reform of the public sector - forcing employees to contribute more towards healthcare and pensions and stripping public sector unions of collective bargaining rights - set off a weeks of angry protests.
But he was aided by huge sums from big business and strong organisation on the ground, our correspondent says.
The fight in Wisconsin reflects the broader national conversation over budgets and the sluggish economic recovery.
Wisconsin is seen as one of a handful of swing states that could be especially important in determining the outcome of the presidential election.
The state has voted Democratic in the last six presidential elections, and in 2008 Barack Obama carried Wisconsin with a 14% margin - a big swing.
At the very least, Mr Obama can no longer take it for granted as he might have done before Tuesday's vote, our correspondent says.
(Source : BBC)