Earlier, Oleksander Turchynov, the first deputy prime minister and a close Tymoshenko ally, said Tymoshenko had won 46.8 per cent of the vote compared with 46 per cent for Yanukovych with 85 per cent of the ballots counted, according to a "parallel count" by her team at polling stations.
The election commission projected the turnout among Ukraine's 37 million voters at about 70 per cent, 3.2 percentage points higher than the January 17 first-round vote in which 18 candidates competed.
Early figures showed a heavier turnout in Yanukovych's strongholds in Ukraine's Russian-speaking east than in Tymoshenko's districts in the country's Ukrainian-speaking west.
Yanukovych's victory, if confirmed, would mark a remarkable comeback by the 59-year-old former prime minister who was disgraced in 2004 by the "Orange Revolution" mass street protests which Tymoshenko, 49, co-led.
Yanukovych's election that year in a poll deemed to have been rigged was quashed by a court and he lost a third round of voting to Viktor Yushchenko, the other leader of the Orange Revolution.
But Al Jazeera's Neave Barker, reporting from Kiev, the Ukrainian capital, said Yanukovych had learnt a lot in the last five years.
"Back then it was very much felt that he alienated voters in the west of the country - voters who looked towards the European Union for a future for the country - by mentioning the need to maintain strong ties with Russia.
"This time round he has refused to speak at all about anything that may be vaguely controversial. In the words of one analyst, he's played a secure campaigning game plan, making sure he doesn't put anyone off."
On top of that, the euphoria of the Orange Revolution has evaporated after five years of falling living standards, with the economy diving by 15 per cent last year.
|If confirmed, Yanukovych's win would cap a remarkable comeback for the former PM [AFP]
A decline in the value of Ukraine's steel and chemicals exports has hammered the currency, slashed budget revenues and undermined the domestic banking system.
And paralysing political squabbles between the president and the prime minister have left voters disillusioned.
Yushchenko, who was eliminated in the first round of the election this time after coming in a humiliating fifth, launched a series of bitter personal attacks on his former ally Tymoshenko during the campaign.
Yanukovych and Tymoshenko have both hinted they will contest the result if it goes against them, sparking fears of a repeat of the 2004 protests.
And the close result was likely to raise questions about whether or not the next president will be able to hold on to power, our correspondent said.
Fraud claims rejected
Before polls closed, Tymoshenko's camp complained of multiple voting and bribery in the eastern Donetsk region, the industrial power base of Yanukovych, and said it would contest results in around 1,000 polling stations.
|Tymoshenko's camp has said it will contest results in around 1,000 polling stations [AFP]
But Matyas Eorsi, head of the Parliamentary Assembly of the Council of Europe's election observation mission, called the balloting "calm" and "professional" and said there was no evidence the vote had been stolen.
"We are 100 per cent sure that this election was legitimate," Eorsi said. "All the international community, and even more important, the Ukrainian public can accept this result."
Regardless of the final outcome of Sunday's election, squabbling looks set to continue, reflecting broader divisions in the former Soviet republic of 46 million people divided almost equally between a Russian-leaning east and south and a Western-friendly centre and west.
Both candidates have said they want to integrate with Europe while improving ties with Moscow, although Tymoshenko is seen as more enthusiastic about the European Union and Yanukovych is characterised as being closer to Russia.
In Russia, Ukraine's former Soviet master, the election was closely watched but state-controlled media avoided taking sides.
Apparently keen to avoid repeating Moscow's 2004 gaffe of prematurely congratulating Yanukovych, Kremlin officials said there was unlikely to be any official comment on Sunday night.