In a television interview, Dean said that the fact that he had grabbed a big early lead in Iowa months ago worked against him in the end.
Kerry's victory capped a late surge that began when Iowans soured on Dean and started searching for an alternative.
Kerry spent at least 73 campaign days in Iowa, more than any other candidate except Dean. He ran on his 20 years of experience in Washington, contending that he was the Democrat best able to unseat President Bush, a pivotal concern for many Iowa voters.
Kerry also benefited from the conclusion of many Iowa voters that Edwards, a newcomer to politics, was too inexperienced and that Gephardt's time had passed.
The turnaround was aided by several strategic decisions. Kerry's campaign was free to spend heavily in Iowa after he opted out of the federal system of campaign subsidies that imposes state-by-state spending limits.
Kerry's decision was driven in large part by the fact that his fund-raising had dried up, forcing him to loan his campaign more than $6 million. Aides predicted that his fund-raising would begin to pick up now as a result of his Iowa victory.
A decorated Vietnam veteran, Kerry was aided by the state's large veteran community. He also got the endorsement of Christie Vilsack, wife of popular Democratic Gov. Tom Vilsack, who remained neutral.
Last night, the governor, smiling broadly and calling himself "Christie Vilsack's husband," said the election proved that "Democrats were interested in who's electable."
The results gave a black eye to organized labor, which invested heavily in Dean and Gephardt, who together were winning less than one-third of the vote.
Dean, whose record-setting fund-raising ability could allow him to maintain his candidacy for many weeks to come, faces new questions about his appeal. He spent nearly two years campaigning in Iowa, and his failure to finish strongly is already prompting questions about whether he will wear well with voters in other states.
Tad Devine, a Kerry strategist, said that Dean's downfall was largely self-inflicted.
"Suddenly, people started finding out things about him they didn't like," he said, noting Dean's gaffes, his poor performance in the final Iowa debate and 4-year-old quotes in which he denigrated the caucus process.
Dean's campaign tried to put the best possible face on the their candidate's failure, for the first time, to defy expectations.
"For some people, [Iowa may be the end of the line. For us, it's the beginning of a marathon that we trained to run and we're going to win," said Steve McMahon, a Dean strategist.
A Kerry campaign adviser acknowledged that Dean still has considerable advantages, including a larger organization than any other candidate in New Hampshire and other states that will hold primaries in coming weeks. But the adviser, who spoke on condition that he not be identified, said recent polls that showed Dean leading in other states would soon be out of date.
"What's happening here and what's happening in New Hampshire scrambles the race," said the Kerry adviser. Polling in states that vote after Iowa and New Hampshire won't "mean anything until Iowa and New Hampshire are done."
No candidate had more on the line than Gephardt. The veteran congressman from Missouri won here in 1988, the first time he ran for president. His Iowa defeat ended his candidacy, which had drawn the support of 21 labor unions that now will have to look elsewhere for a candidate.
Hours before the caucuses began, officials of the Edwards and Kucinich campaigns announced a deal asking their supporters to join forces at caucuses in which one or both candidates lacked the numbers needed to win delegates on their own. Such arrangements are rarely effective, however, and it wasn't immediately clear what impact, if any, they had on the results.