The problems on Monday are likely to cause embarrassment in the tiny Balkan nation of 2.1 million that is craving stability and hoping for membership in Nato and eventually the European Union.
"Whilst the generally orderly conduct of the elections in most places is very welcome, the serious and persistent irregularities in a significant number of municipalities undermine the process as a whole," said Julian Peel Yates, heading the observer mission for the Organisation for Security and Cooperation in Europe (OSCE).
"The behaviour of the persistent offenders must change before the [27 March] second round."
The Vienna-based organisation said its team of 360 monitors reported problems in 20% of the polling stations visited, including "ballot stuffing, stolen ballot papers and ballot boxes ... tension in and around polling stations and intimidation".
Sunday's vote was seen as an important test of power-sharing reforms between the Macedonian Slav majority and ethnic Albanian minority.
Following a 2001 insurgency by ethnic Albanian rebels, the country's municipal map was redrawn, with mayors gaining expanded control over schools, law enforcement and taxation.
Macedonia's ruling Social Democrats said irregularities were minor.
The authorities reported two arrests for alleged ballot tempering, and said three polling stations had closed due to clashes between rival ethnic Albanian parties.
The OSCE, however, which visited 40% of the nearly 3000 polling stations, said serious problems occurred in nine of the country's 85 municipalities, mostly in northern and western regions.
"Serious irregularities observed in a number of municipalities undermined the universality and equality of the vote, and there was widespread violation of the secrecy of the ballot," the organisation said.
The state election commission said voter turnout nationwide - a concern before the ballot - was about 59%. About 70% of votes had been counted.
But in Skopje, the commission stopped issuing results, citing communication problems with the city's local election commission - leaving candidates to bicker over their own party-issued estimates.
Businessman Trifun Kostovski claimed 58% of the vote and outright victory against government-backed incumbent Risto Penov, saying the results had been deliberately delayed.
"They are lying about the turnout and manipulating the results," Maja Muhic, a spokeswoman for Kostovski said. Penov supporters insisted the race would go to a runoff on 27 March.