McCain, an Arizona senator, beat Romney, a former Massachusetts governor, in a hard-fought Florida primary that gave him clear front-runner status heading into the critical February 5 "Super Tuesday" voting in 21 states with Republican contests.
With most of the votes counted, McCain led Romney by 36 percent to 31 percent.
"Our victory might not have reached landslide proportions, but it is sweet nonetheless," McCain told supporters chanting "Mac is back" in Miami.
"We have a ways to go, but we're getting close," he said of the nomination to represent Republicans in November's presidential election. McCain's win gives him all of Florida's 57 delegates to the party's national nominating convention.
Giuliani, who staked his campaign on a strong showing in Florida, finished a distant third, just ahead of former Arkansas Gov. Mike Huckabee, in the state, after leading the Republican pack in national polls for much of last year.
Giuliani planned to drop out and endorse McCain, a friend and political ally before the presidential race began, on Wednesday, according to media reports. He talked about his campaign in the past tense during a speech in Orlando, Florida.
"We ran a campaign that was uplifting," Giuliani said. "You don't always win, but you can always try to do it right."
U.S. Sen. Hillary Clinton of New York easily won a Florida Democratic race that featured no active campaigning because of a dispute between the national and state parties.
The national party stripped the state of its delegates to the national convention and Democratic candidates pledged to stay away.
Clinton, who lost to rival Barack Obama in a landslide in South Carolina on Saturday, visited Florida after polls closed in a bid to claim at least a symbolic victory.
"Thank you Florida. I could not come here to ask in person for your votes but I am here to thank you for your votes," she said in Davie, outside Fort Lauderdale.
ECONOMY TOP ISSUE
Exit polls showed the economy was the top issue among Republican voters in Florida, with about half listing it as their most important concern. About six in 10 voters described themselves as conservatives.
McCain and Romney had split the last four of the state-by-state nominating contests. McCain won in South Carolina and New Hampshire and Romney carried Michigan and Nevada, the latter a state scarcely contested by other Republicans. Huckabee won the kick-off contest in Iowa.
Romney aides said the result created a two-man Republican race with McCain, and Romney would press ahead to February 5.
"I think it's time for the politicians to leave Washington and for the citizens to take over," Romney, a wealthy venture capitalist who has touted his real-world business experience, said in St. Petersburg, Florida.
"At a time like this, America needs a president in the White House who has actually had a job in the real economy," he said.
Huckabee also said he planned to go on to compete in the Super Tuesday contests, which include several Southern states like his home state of Arkansas, and Alabama, Oklahoma, Tennessee and Georgia.
