The Tory MP, who has represented the constituency since 1997, held the seat but saw his majority slashed by almost 10,000 votes.
Mr Loughton said: “Can I just thank everybody who has placed their confidence in me to remain as the Member of Parliament for the fantastic East Worthing constituency with a slightly increased vote, but with a rather decreased majority.”
He also called for unity in troubled times: “I’ve never been involved in an election campaign where we’ve had the terrorist threaets that have taken lives during course of an election.
“A week from today we will also remember with sadness the death of a parliamentary colleague, Jo Cox, last year.
“I think we will all be united whatever our political differences in seeing that those people who try to disunite us actually bring us closer together.”
There were wild cheers for Sophie Cook, who led a surging Labour campaign which secured 20,882 votes – 11,145 more than in 2015.
Ms Cook, a television presenter and former RAF engineer, said: “I’d like to say thank you to everyone from East Worthing and Shoreham Labour Party who have battled against overwhelming odds over the last five weeks.
“No one gave the Labour Party a chance nationally, no one gave the Labour Party a chance in this constituency.
“We’ve proven them wrong.
“Both nationally and here in East Worthing and Shoreham people have started a change.
“This country will start respecting people in a way that it hasn’t done for years.”
Results in full:
Sophie Cook (Labour) 20,882
Mike Glennon (UKIP) 1,444
Oli Henman (Lib Dems) 2,523
Tim Loughton (Conservatives) 25,988
Andy Lutwyche (Independent) 432
Carl Walker (NHA) 575
Leslie Groves Williams (Green Party) 1,273