Local television said that the BJP was set to return to power for a fourth term in Gujarat, with leads in 117 of the state's 182 assembly constituencies.
The Congress party received heavier losses than expected, winning 62 seats. Independent candidates took three.
The religious polarisation which affects large parts of the state was plain for all to see during Sunday's second phase of voting.
Many Hindu voters expressed admiration for Modi's performance, especially in the economic field, and appeared to be the main constituency of the ruling BJP.
Muslims, by contrast, were unanimous in their opposition to Modi's leadership and continued BJP rule.
Muslims make up nine per cent of the state's population, and feel they have been neglected and marginalised with the welfare of Hindus the Modi government's only priority.
The election results in Gujarat, one of India's richest and fastest-growing states, is of significance for the country's two main parties, the Congress and the BJP, in the run-up to national elections.
They are due by mid-2009 but could come earlier, with the Congress-led ruling coalition in New Delhi wobbling under pressure from key communist allies who oppose a nuclear-energy deal with the US.
Modi stood accused of encouraging the riots in 2002 in which hundreds of people, most of them Muslims, were killed.
He contested a seat in Ahmedabad and dominated political debate in the state.