Thousands of fans have taken to the streets to toast Algeria's success
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Captain Riyad Mahrez led the celebrations, and the Manchester City star along with his team-mates were welcomed back home by Prime Minister Noureddine Bedoui.
It is the first time since 1990 that Algeria have won the Africa Cup of Nations, and their bus was decorated with two stars to mark their second tournament success.
The words "we are proud of you" were painted on the side of the vehicle in Arabic and Amazigh, the North African country's two official languages.
Kheireddine Zetchi, president of the Algerian football federation, said:
This victory will very certainly breathe new life into the country.
A bizarre goal in the second minute gave Algeria a narrow 1-0 victory over Senegal.
Baghdad Bounedjah’s strike took a wicked deflection off defender Salif Sane and looped high into the air before nesting into the back of the net with goalkeeper Alfred Gomis rooted to the spot.
Bounedjah had spent the last few minutes of their quarter-final against Ivory Coast weeping on the substitutes bench, thinking he might have cost his team the match.
On Friday, the 27-year-old's tears of despair turned to unmitigated joy.
The Qatar-based player had not had the happiest of tournaments. After scoring in the opening match against Kenya, he was criticised for his wayward finishing.
But the worse was to come in the quarter-final against Ivory Coast when he won a penalty that would have given Algeria a 2-0 lead - only to send his effort against the crossbar.
He then missed another chance when put clean through, Ivory Coast equalised, Bounedjah was substituted and spent the remainder of the match crying inconsolably. It seemed it could not have got worse.
Fortunately for him, Algeria won the match on penalties and coach Djamel Belmadi came out in defence of his beleaguered number nine.
"I chose Bounedjah because he works a lot," he said. "He assisted with all our goals, he scored in qualifying.
He's an outstanding scorer, a huge worker. Penalty missed, no worries for me.
It was all very different on Friday when Bounedjah's second minute shot took a wicked deflection off a defender to settle the final and bring Algeria a title few had thought possible only a few months earlier.
"I came here to fight for Algeria, no other incentive," he said. "I will always fight for Algeria."