The Islamists lost out despite their prominent role in reconstruction since the earthquake killed 73,000 people and destroyed the homes of three million.
Out of 40 declared results for the 41 seats, a government-backed party won 20, while the rest have gone to other political parties and independents.
The religious alliance, Muttahida Majlis-e-Amal, had 33 candidates in the elections but all of them lost.
The ruling All Pakistan Jammu and Kashmir Muslim Conference, a conservative group, is set to form the next government, although it did badly in the main quake-hit areas, including Muzaffarabad, the devastated capital of Pakistani Kashmir.
Joblessness, high property prices, slow construction and water and sanitation problems continue to be problems in Kashmir following the quake.
The Islamists, who back militant groups fighting Indian rule on the other side of the ceasefire line dividing Kashmir, have not traditionally done well in elections in the region.
Azad Kashmir, or Free Kashmir, as Pakistan calls its part of the region divided with India, is nominally autonomous with a president, a prime minister and its own constitution.
India rejected the polls, saying that they could not be called "free and fair".
India and Pakistan have fought two wars over the Himalayan region since gaining independence from British rule in 1947.