Wigtown was one of six towns competing for the status, beating off bids from Dunblane, Dalmellington, Gatehouse of Fleet, Moffat and Strathaven. A member of the book town committee, Councillor Andrew Patterson, said it was the economic shot in the arm the town badly needed.
He said the town, once the administrative centre of the county, had gone into decline after local government reorganisation in 1974, and when its two creameries and a whisky distillery closed down.
"We are certain the funding of the book town will be found not only among booksellers and dealers but also from people like Scottish Enterprise," said Councillor Patterson after toasting the announcement with champagne.
"We already have very good bookstores established here, as well as a bookbinders and printers. The large former merchants' houses are ideal for redevelopment.
"It's particularly apt that Wigtown should have book town status because it is here that Bishop Minian brought the first form of written language in Greek, Latin and Hebrew, in 397 AD.
"Our motto is `let Wigtown flourish' which is now what we intend to happen," he added.
Tony Seaton, head of Strathclyde University's Tourism Research Unit, which launched the initiative, said Wigtown showed the greatest potential for success among the six contenders.
He added: "The rate at which international book towns are now developing - three established in Belgium, Finland and Denmark in the last two years - means making the success of Wigtown a high priority. "
Financing for the project has yet to be finalised but it is expected to be a mix of public and private investment.
Eddie Brogan, head of Tourism Development at Scottish Enterprise, said experience elsewhere had shown that book town status could bring potential economic benefits, but that the title alone was not enough.
He added: "Substantial and ongoing effort is needed to create and sustain a successful book town. We believe Wigtown has what it takes to achieve this and wish it every success with this important venture. It could provide a major tourism boost not only for Wigtown but also Dumfries and Galloway, and for Scotland as a whole."
It is estimated that Scotland's book town, sited in the north-east corner of the Machars peninsula could attract at least 50,000 people a year. Hay-on-Wye now attracts 500,000 visitors, while Redu, a book town in Belgium brings in 300,000 annually.
Sandy Dear of the Scottish Tourist board said: "It will broaden Scotland's appeal as a visitor destination and help encourage more people to come here, not just in the peak summer months but throughout the year."Reuse content