Preliminary results issued on Saturday gave the opposition conservative Civic Democrats 35.38% of the vote - the largest share of any party.
Vaclav Klaus, the Czech president, said he would start talks with Mirek Topolanek, the Civic Democrat leader, on Monday about forming a new government.
However Jiri Paroubek, the prime minister, whose Social Democrats took 32.32% of the vote, refused to concede defeat and said he may challenge the result in the courts if it is confirmed.
The conservative party and its two smaller centrist allies, the Greens and Christian Democrats, are set to hold 100 seats in the 200-member lower house - the same as the ruling Social Democrats and far-left Communists.
"This is probably the worst outcome the election could produce," said Pavel Saradin, a political analyst at Palacky University in Olomouc.
"Unless parties make about-faces, they may want to deal the cards again and hold fresh elections."
Some analysts said the election result could force the Civic Democrats and Social Democrats into a "grand coalition", a scenario they say could be acceptable to Klaus.
The Civic Democrats campaigned on a promise to cut taxes and weed out corruption.
Surveys showed that many voters still had mixed feelings regarding the conservatives' economic reform agenda but decided to punish the ruling Social Democrats for a series of sleaze scandals that have occurred during their eight-year tenure.