Mr Erdogan said the new constitution would "embrace all parties" But the party failed to secure the two-thirds majority needed to make unilateral changes to the constitution.
Mr Erdogan had widely been expected to win despite criticism from some of his authoritarian style of leadership.
With 99% of ballots counted the AKP had 50% of the vote, which local media said translated to 326 seats in parliament.
That is short of the 330-seat "super majority", which would have enabled the party to make constitutional changes without putting it to a public referendum.
The party won 341 seats in 2007.
Accepting his victory in Ankara, Mr Erdogan said his party "will be humble".
Strong growth "The people gave us a message to build the new constitution through consensus and negotiation," said the prime minister.
"We will be seeking consensus with the main opposition, the opposition, parties outside of parliament, the media, NGOs, with academics, with anyone who has something to say."
It did not take long for the count to show what everyone here had expected - another decisive victory for the governing Justice and Development Party (AKP). The result is a powerful endorsement of the blend of economic liberalism and religious conservatism offered by Prime Minister Recep Tayyip Erdogan. With this win, he is now the most powerful political figure in Turkey since the days of the country's founding father, Kemal Ataturk. The main opposition party, the CHP, under its new leader, Kemal Kilicdaroglu, did offer a more appealing alternative for secular Turks than in previous elections. But it still got less than a quarter of the votes cast.
And in the south-east, there was a strong vote for Kurdish candidates, which will put pressure on Mr Erdogan to make a more convincing effort to resolve the long-running conflict between the state and the large Kurdish minority.
Turkish voters have given Mr Erdogan an impressive mandate. The question now is, what will he do with it? After his last election victory, he promised to be a bridge-builder, a prime minister for Turks from all walks of life. But in practice he proved to be an abrasive and divisive leader. His opponents will now be hoping he adopts a less confrontational style.
And in the south-east, there was a strong vote for Kurdish candidates, which will put pressure on Mr Erdogan to make a more convincing effort to resolve the long-running conflict between the state and the large Kurdish minority.
Turkish voters have given Mr Erdogan an impressive mandate. The question now is, what will he do with it? After his last election victory, he promised to be a bridge-builder, a prime minister for Turks from all walks of life. But in practice he proved to be an abrasive and divisive leader. His opponents will now be hoping he adopts a less confrontational style.
Mr Erdogan said the AKP and others would write a "civilian, free constitution which embraces all parties of the society together".
He also alluded to Turkey's aspiration to be a voice in the West for the Middle Eastern region and Muslims, saying Bosnians, Lebanese, Syrians and Palestinians also benefited from his victory."Believe me, Sarajevo won today as much as Istanbul, Beirut won as much as Izmir, Damascus won as much as Ankara, Ramallah, Nablus, Jenin, the West Bank, Jerusalem won as much as Diyarbakir."
More than 50 million people, about two-thirds of Turkey's population of 73 million, were eligible to vote in Sunday's election. NTV television said turnout was 84.5%.
AKP supporters were celebrating on the streets of the capital on Sunday night.
"I am truly happy. I hope the outcome will be in favour of our country and nation. I cannot find words to express my happiness," said one man.
The BBC's Jonathan Head in Istanbul says Turkey now faces another four years with Mr Erdogan the dominant figure, and his AKP pretty much able to do what it likes in parliament.
Early results indicated that the secular Republican People's Party (CHP) had 26% of vote with 135 seats - 23 more than last time, and the far-right Nationalist Movement Party (MHP) with 13% has 54 seat, down 17.
Independent candidates fielded by the pro-Kurdish Peace and Democracy Party (BDP) also did well in the south-east, winning 5.8% of the vote and 35 seats.
"This is a huge success for us," prospective Kurdish MP Serafettin Elci told Reuters.
"We expect the PM to signal a strong hope for the solution of the Kurdish problem for Turkey's future."
Our correspondent says this will increase pressure on the government to address its long standing demands for greater autonomy and official recognition of Kurdish identity.
The AKP, which has Islamist roots, has presided over strong economic growth and a more assertive foreign policy since taking power in 2003.
It has also seen unemployment fall - down to 11.5% in March from 14.4% in the same period last year. The country is a member of Nato as well as a candidate for membership of the European
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