Surveys have long found that Clinton, the second-term senator and former first lady, was viewed as the most experienced and best-qualified to lead on matters of national security and war.
But voters instead endorsed Obama's primary argument for "turning the page" in Washington, an argument that essentially painted Clinton as a status quo candidate.
"Change is the driving dynamic of the race, as opposed to who has the most conventional resume or who voters see as the 'strongest leader,' " said David Plouffe, Obama's campaign manager.
The results are especially damaging for Edwards, the former North Carolina senator. Even though he barely edged out Clinton for second place, the Democratic race is very much a two-person contest, pitting Obama against Clinton.
Edwards was the party's 2004 vice presidential nominee thanks in part to his surprisingly strong second-place finish here in that year's caucuses.
But after campaigning in the state nearly nonstop since then, Edwards was thought by some to have the strongest organization and the best chance at victory.
Despite gaining steam in recent weeks with sharply populist attacks on "corporate greed" and lobbyists' power, Edwards on Thursday failed to win his core base of union households and lower-income people.
He placed third among union households, winning 24% of that group, compared to 31% for Clinton and 28% for Obama, according to the entrance survey.
Edwards vowed on Thursday to compete in Tuesday's New Hampshire primary and beyond, but strategists for his rivals said they do not view him as a threat, mostly because of his lackluster fundraising and the expenditure limits imposed on his campaign because of his decision to accept public financing.
Clinton, however, has the national support base and resources to forge ahead.
She retains double-digit leads in national polls and in most of the big states that vote in late January and early February.
She has raised more than $100 million and, though her once-daunting lead in New Hampshire has dwindled in recent days, she enjoys advantages there that she did not have in Iowa.
It was a stronger-than-expected finish in New Hampshire in 1992 that allowed her husband to declare himself the "Comeback Kid," and strategists say many voters there remain loyal to the Clintons.
One bright spot in Iowa was her strength among older voters, a strength that could help her along the way.
