Senator Richard Lugar, a 35-year Senate veteran and leading foreign policy voice, was soundly defeated in the Indiana Republican primary by a Tea Party-backed rival on Tuesday, jolting the American political establishment during a volatile election year.

Lugar, 80, was the first Senate incumbent ousted this year and his defeat showed that the anti-Washington, small government Tea Party movement is alive and well.

The veteran Senator lost to Indiana state Treasurer Richard Mourdock by more than 20 percentage points, according to preliminary results from the state election division.

"Lugar's defeat is a wake-up call from the Tea Party to the Republican establishment," said Ford O'Connell, a Republican strategist and chairman of CivicForum PAC, which endorsed Mourdock and contributed to his campaign. "It will make them think about how to proceed, not just in what they say but how they vote in the run-up to the (November) election."

Read more from Nick Carey and Eric Johnson at Reuters

This is a positive sign for the Tea Party, who many pundits have written off, but the job will not be complete until Mourdock wins in November. The Indianapolis Star's Mary Beth Schnider has more on Tea Party challenger Richard Mourdock's decisive victory: 

Sen. Richard Lugar’s 36-year Senate career is now history.

Lugar was defeated in today’s Republican primary election by Treasurer Richard Mourdock, ending his bid for a seventh term in the U.S. Senate. 

It wasn’t even close. 

With 70 percent of the vote counted, Mourdock had 60 percent to Lugar’s 40 percent.

Mourdock will face Democrat U.S. Rep. Joe Donnelly and Libertarian Andy Horning in the November election.

Very solid analysis. From NBC's First Read:

(1) Residency and outreach: Lugar hasn’t lived in Indiana for years and wasn’t able to say what address was on his driver’s license. Mourdock exploited it. And Lugar didn’t do enough outreach with local GOP establishment or Tea Party leaders. Lugar disputes that, telling NBC’s Kelly O’Donnell: “I've been perfectly connected all the way along. It’s a ridiculous charge. How can anybody be more Hoosier? I've got a farm out here that I continue to work with my sons. I manage it on behalf of our family. I'm in touch every week with everybody in the state, usually on the ground with visits but with our staffs, trying to meet almost every challenge of individual Hoosiers or groups.”

(2) Ignoring the recent past: Last year, Republicans walked Lugar through what went wrong with Bennett, Lisa Murkowski, and Mike Castle. And what went right with John McCain -- no favorite of the Tea Party – who went after opponent J.D. Hayworth early on and never let up. Unfortunately for Lugar, strategists say, the advice was ignored. If you don’t want to change your own stances, then make the alternative unacceptable. McCain made his alternative unacceptable.

(3) Campaign: he didn’t have the kind of campaign in place that was necessary to win this kind of race. Hatch and even Olympia Snowe got it, and hired top operatives. Mourdock hired people who’d been there before;

(4) Message: “Lugar as statesman” just wasn’t going to get the job done. Movements have short-term memories. Mourdock’s message was simple and effective– “Dick Lugar is a fine man, but 36 years in Washington is long enough, and he’s lost touch with Indiana.”;

(5) Candidate: So much of what happens in campaigns, comes from the top. As revered as Lugar is in Washington, he wasn’t able to adapt -- and failed to fully appreciate -- a changing dynamic within his party. Yesterday, for example, he continued to defend earmarks.  

When Newt Gingrich's campaign finally died last Wednesday, it took with it the hopes of Tea Party and other conservative groups to lift one of their own into the White House.

But it did not end their interest and involvement in the 2012 election cycle. It only shifted it.

[T]he Tea Party faces its own moment of truth this cycle. Its boisterous, headline-grabbing rallies are a thing of the past. Its poll numbers have slipped from a commanding high to even or worse. Those extremely opposed outnumber those extremely supportive of its agenda by big and growing numbers. Moreover, Republican leadership in the House openly defies its wishes, and Democrats have begun to think they can use Tea Party affiliation against their opponents.

[U]nless the Tea Party can deliver this cycle, unless it can push favored candidates to victory and be seen as having played key roles in those victories, its future may be limited indeed.

That's what makes this Tuesday so important. That's the day Indiana voters will go to the polls to choose between six-term U.S. Sen. Richard Lugar and his Republican primary opponent, state treasurer Richard Mourdock.

Fortunately for the Tea Party, it has picked a good place to make its stand. Lugar positions himself as a statesman willing to work across party lines at a time when sharp elbows and partisanship carry the day. He has angered conservatives with his votes for Supreme Court Justices Elena Kagan and Sonia Sotomayor. He has an F rating from the National Rifle Association, a tepid 75from the American Conservative Union, and a 73—two points below the disappointing Republican average—in the more economically focused Heritage Action for America ratings.

Read more from Ford O'Connell at U.S. News & World Report

Would be a big victory for the Tea Party in Indiana. From NationalJournal:

The consensus around Sen. Richard Lugar's re-election bid has changed markedly, from all-out optimism that he would easily dispatch challenger Richard Mourdock to downright pessimism, bordering on resignation. Lugar would be the Tea Party's most prominent trophy, and they appear to be on the verge of scoring the upset in a few weeks.

If Lugar survives Mourdock's challenge, it is because he has a significant campaign resource advantage and called in every political marker, both in Indiana and across the country.

Read more from Ford O'Connell at Politico's "The Arena"