Susilo, Megawati's one-time security minister, had taken 57% of 987,369 votes counted at 0800 GMT on Monday, the election commission said. Megawati trailed behind taking 43%.
About 151 million people were registered to vote in Indonesia, the world's fourth most populous country.
In a first-round election among five candidates in July, the initial returns proved a fairly accurate indication of the final outcome.
The run-off between Susilo and Megawati in Indonesia's first direct presidential ballot caps a turbulent six years since Suharto stepped down in 1998.
"I'm quite confident and I have reason to believe that I could win," Susilo told reporters at his home on the outskirts of the capital Jakarta before the polls closed.
Megawati: No need to be nerous.
We'll see the result
Asked about forecasts that Susilo, who consistently led opinion polls before the vote, would finish well ahead, Megawati said: "No need to be nervous. We'll see the result. I think that's better than making an early statement."
The election came 11 days after fighters believed to be from the al Qaida-linked Jemaah Islamiah killed nine people and wounded 182 with a car bomb outside the Australian embassy in Jakarta, the third major attack within two years.
Tens of thousands of police are on high alert across the vast archipelago after officials warned of more attacks amid numerous bomb hoaxes and rumours of more car bombings before the vote.
Final results of the election will
be declared on 5 October
In the event, voting was reported as calm and without major incident. The atmosphere at many polling stations was festive and friendly.
"I'm in Jakarta, [and] probably visited about 12 or 15 polling stations today. There are absolutely no problems or no reports of any difficulty here," said Glyn Ford, chief of a European Union observer mission.
Despite the running count of results the election commission issues, the final result will be declared officially on 5 October.