Mission official Enrico Palermo said: "We made it to space!" The plane returned to a normal flying configuration before gliding to land on the Mojave Air and Space Port runway.
The United States has not sent any people to space since the U.S. space shuttle programme ended in 2011, and has relied on Russian Soyuz rockets to ferry astronauts to the International Space Station. Virgin Galactic's owner, Richard Branson, is expecting to begin commercial space flights in 2019 - as he is set to be the first one up.
The company plans to eventually take paying passengers on short trips to space.
Hundreds watched the space tourism plane take off at 7.10am and successfully land back at the test centre, which Mr Branson described as "a relief". The flight was the first by the vehicle to cross the boundary of 50 miles, or approximately 80 kilometers, that US government agencies use to award astronaut wings.
Virgin Galactic First Flight to Space Imminent
That differs from a long-held view that places the boundary at 62 miles.
"This is a huge step forward and once we look at the data we'll see what that pathway is", he said.
Two test pilots Mark "Forger" Stucky and former NASA astronaut Rick "CJ" Sturckow then hurtled the craft upward and out of sight.
The spaceship reentered the atmosphere at 2.5 times the speed of sound and landed safely a few minutes later.
"Like the early days of aviation, these commercial space flights take grit and innovation - the very attributes it takes to blaze a trail for generations to follow", the FAA said in its announcement.
Virgin Galactic has been conducting research project during these test missions, but the goal still is to provide commercial flights that would allow civilians the ability to become astronauts.
George Whitesides, Virgin Galactic's chief executive, told reporters during a facilities tour on Wednesday in Mojave: "We've had our challenges, and to finally get to the point where we are at least within range of space altitude is a major deal for our team".
Virgin Galactic says about 600 people have reserved tickets, priced between $200,000 and $250,000, to ride aboard its supersonic plane.
The US space agency paid Virgin Galactic to fly four space science and technology experiments on the VSS Unity, "making this Virgin Galactic's first revenue generating flight", the company added.
When asked about Virgin Galactic's competitors in a recent interview with CNN Business, Branson said it was not a "race". After that, it appears that the experience will be available to the public - for a hefty price of course.
But years passed, the program suffered delay after delay and in 2014, a fatal setback: The spacecraft came apart mid-flight, killing Michael Alsbury, the pilot. Also, SpaceX founder Elon Musk recently announced plans to take a wealthy Japanese businessman and his friends on a trip around the moon.