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Ms Preece contested the 2014 and 2018 council elections, but will now serve until the 2022 election after her victory.
Preece was 25th in the 2018 election with 1.2 per cent of the primary vote, below eight of the candidates she defeated in the recount.
Former councillor Simon Wood was second in the recount.
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Ms Preece works at the Launceston General Hospital and has been an active community member through her work with Rotary Club.
Previously, she has served as the South Launceston Rotary Club president and is now serving as an assistant governor for Rotary Tasmania.
During past election campaigns, Ms Preece has advocated for small business support, improved street parking and developing the Launceston CBD and outer suburbs.
Launceston mayor Albert van Zetten welcomed Ms Preece's appointment to the council.
"I want to congratulate Krista Preece on her election to the City of Launceston, and look forward to the skills, knowledge and expertise she will bring to the Council table," he said.
"I have no doubt Krista will bring new perspectives and ideas to the table, and it's exciting to see another female elected to the City of Launceston."
Former councillor Simon Wood, Bob Salt, Bruce Potter and Matthew Bowen were all part of the recount.
Ms Finlay vacated her position at the council last month after being elected as a Labor member for Bass at the recent state election.
The vacancy triggered the need for a recount with the TEC writing to all unsuccessful nominees from the 2018 council election for nominations.
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