With over 99% of the votes counted, Prime Minister Andrus Ansip's Reform Party is poised to win 31 seats in the Baltic state's 101-seat parliament.
The liberal Centrist Party, supported by the country's Russian-speaking minority, which won 26.2%, is in close second, with 29 parliamentary seats in preliminary results.
The winning party and its leader are expected to form the new Cabinet. Ansip has, therefore, a good chance of retaining his post for another term.
The other parties that made it into parliament include the rightist Pro Patria and Res Publica Union (IRL) with 17.8% of the vote or 19 seats, the Social Democratic Party with 10.6% and 10 seats, Estonia's largest mainly agrarian party People's Union with 7.2% and six seats, and the Estonian Green Party, with 7.1% and six seats.
Estonian analysts have suggested the Reform Party is likely to set up a ruling coalition with IRL and the Social Democrats.
Ansip has mentioned the possibility on Estonian television, saying his party and IRL "have common interests," and "a union of rightist parties would be more preferable."
But other parties' involvement in the future coalition, including that of the Centrist Party reportedly backed by the Kremlin, is also possible. The leaders of all parties in parliament have refused to rule out their participation in the alliance.
The premier and his party are widely expected to return to a dispute over the Monument to a Soviet Liberator, or the "Bronze Soldier," in central Tallinn, which many Estonians want removed as "a symbol of Soviet occupation."
Estonia, along with neighboring Latvia and Lithuania, was taken over by the Soviet Union in 1940, and the Soviets regained control of the Baltic nations from Nazi Germany in 1944. Russia maintains that it came to the Baltics to liberate it from Nazis, whereas many local residents see the advent of Soviet soldiers as an act of aggression.
The law permitting the relocation of the monument, which was approved earlier by parliament, was vetoed by the president in late February. It sparked off sharp criticism in Russia, which has accused Tallinn of encouraging Nazism and discrimination against ethnic Russians, and prompted debate on possible sanctions against Estonia.
Education in Russian and a more general language law are also expected to dominate the parliamentary and Cabinet agenda following the elections.
Many members of Estonia's Russian community are denied citizenship and employment rights, and cannot receive education in their native language. Thousands of Russian speakers could not as a result take part in the polls, which is why, experts said, the Centrist Party came in second.
