ANCHORAGE, Alaska (AP) — Backed by the Tea Party Express and Sarah Palin, a little-known conservative lawyer from Alaska became the latest newcomer to the national political stage to take down an incumbent in 2010.

In arguably the biggest political upset of the year, Joe Miller claimed the Republican nomination for U.S. Senate when incumbent GOP Sen. Lisa Murkowski conceded Tuesday evening.

Miller’s win was a major victory for the tea party movement and marked the first time it had defeated a sitting senator in a primary.

Tea partiers had knocked off Utah Sen. Bob Bennett at a state convention in May, and emboldened organizers now have their sights set on Delaware, where they are backing Christine O’Donnell against the more moderate Rep. Mike Castle in the GOP Senate primary.

Miller, 43, told The Associated Press by phone late Tuesday that he’ll campaign this fall on transferring power and control over resources from the federal government to Alaska and the other 49 states.

The state has long been heavily reliant on federal money to run — a legacy largely carved out by former Sen. Ted Stevens before his death in an August plane crash.

But the government’s impending financial crisis will eventually force a reduction in funding to the state, Miller said by phone from Fairbanks.

“We have to be prepared for that, and the way to do it, of course, is to progressionally transfer holdings of the federal government to us,” he said. “And of course, also by reducing federal regulatory burdens over the lands that we do control so that we can develop them more freely and more economically.”

Murkowski is the third senator to lose this year amid deep dissatisfaction with the Washington establishment. Bennett and Arlen Specter, D-Pa., were the others.

She trailed Miller — an Ivy League-educated lawyer, West Point graduate and decorated Gulf War veteran — by 1,668 votes after the Aug. 24 primary.

Election officials began counting absentee and outstanding ballots Tuesday, and Murkowski made slight gains. But after more than 15,000 ballots were counted, she remained 1,630 votes behind.

“We all know that this has been a long week, a terribly long week,” she said at campaign headquarters while conceding.

She said that while there were still outstanding votes, “I don’t see a scenario where the primary will turn out in my favor, and that is a reality that is before me at this point in time.”

“And for that reason, and for the good of the state of Alaska … I am now conceding the race for the Republican nomination.”

The stunning result was a huge validation of the political power of Palin as the former Alaska governor has been playing kingmaker in midterm elections ahead of a potential 2012 White House run.

Miller cast Murkowski as too liberal and part of the problem in an out-of-control Washington. It is a campaign strategy that has helped oust other incumbents this year and that Republicans will employ again in November as they look to take back Congress.

Miller will face Democrat Scott McAdams, a small town mayor, in the November general election. The former commercial fisherman was given little chance against Murkowski, and as of June 30 had raised less than $10,000.

But Democrats figure his chances are better against Miller, and they plan to present him as a moderate, rational alternative.

“Lisa Murkowski is a class act who always put Alaska first,” McAdams said in a statement late Tuesday. “By contrast, lawyer Joe Miller ran an unfair, nasty campaign that didn’t extend to Lisa Murkowski the respect she deserves.”

After keeping a low profile for much of the race, Palin recorded a robocall for Miller in the campaign’s final days and touted him as a “man of the people” on her Facebook page. She also repeated a claim that Murkowski had waffled on her position on repealing the federal health care overhaul — claims the senator has called false.

Aside from a failed legislative bid in 2004, the Kansas-raised Miller had no experience running in political races before jumping into the race to take on Murkowski. He is friends with Sarah and Todd Palin, and they both endorsed him.

Miller also had the blessing from within the tea party crowd. The California-based Tea Party Express said it spent nearly $600,000 to help Miller — most of that in the race’s final weeks, when Miller’s camp said it sensed momentum was on its side and that Miller would win.

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Associated Press writers Becky Bohrer in Juneau and Rachel D’Oro and Mark Thiessen in Anchorage contributed to this report.