Influential Shia cleric Muqtada al Sadr's group were declared the winners of the Iraqi election after votes in 16 of 18 provinces were tallied.
Iraq's electoral commission says a coalition led by Shia leader Muqtada al Sadr has won the election, with 91 percent of the ballots counted.
Prime Minister Haider al Abadi has called on all political parties to respect the results of Saturday's poll. He did poorly in a number of Shia provinces where he had been expected to win. Abadi has said he is ready to work with the winner of the election. But Sadr will not become prime minister because he did not run in the election.
But he could rule by proxy.
The populist Shia cleric on Tuesday dealt a blow to both Iranian and American influence with a shock election triumph that has upended Iraqi politics.
Counting was still ongoing three days after the first parliamentary poll since the defeat of Daesh, but the preacher's group were declared the winners with 16 of 18 provinces tallied.
Victory for the veteran nationalist's Marching Towards Reform alliance with Iraq's communists — pitched as an anti-corruption outsider force — would be a slap in the face for Iraq's widely reviled ruling establishment.
Sadr — who has ruled himself out of becoming prime minister — looks likely to be the key powerbroker and has already mooted a technocrat government of some dozen parties that bridge sectarian divides.
But with his group set to be far from a majority in parliament, wrangling over any potential coalition should take months — and there remain major obstacles ahead that could thwart Sadr's ambitions.
The elections on Saturday — hit by record abstentions — saw a clear rejection of the Iraqi elite that has run the country since the ouster of Saddam Hussein in 2003.
Tallies put the anti-establishment Conquest Alliance of pro-Iranian former paramilitary fighters who helped battle Daesh in second, and incumbent Abadi's bloc back in third.
Abadi — a consensus figure favoured by the US — had been seen as likely frontrunner after declaring victory over the militants five months ago.
Sadr rose to prominence in the wake of the US invasion, when his militia fighters fought a bloody insurgency against American troops.
After years on the sidelines, he has now reinvented himself as a crusading champion of the poor who has linked up with secularists to battle corruption.
Supporters in his impoverished Baghdad stronghold, Sadr City, were hopeful that victory could spell improvements.
"If we want to change things then the prime minister needs to come from Marching Towards Reform," said Salah Jamal, 24.
"We have tried all the others," Jamal insisted. "But we have had no results."
The protracted horse-trading ahead comes as surging tensions between the US and Iran after Washington's withdrawal from a landmark nuclear deal with Tehran have sparked fears of a tug-of-war over Iraq.
Sadr is one of the few Iraqi politicians who is opposed to both the presence of American troops in Iraq and the overbearing influence neighbouring Iran exercises over the country.
In a surprising pivot last year, he visited regional Sunni powerhouse Saudi Arabia to the south, with Riyadh looking to increase its involvement in Iraq as it vies with Tehran.
Sadr is likely to face fierce opposition from established political forces, who may look to coalesce in a bid to stop him taking control.
Political sources told AFP news agency on Tuesday that Tehran was already pushing meetings among his Shia rivals to seek a way to head off Sadr.
One of the alliances being suggested would see Abadi link up with the Conquest Alliance of former anti-Daesh commander Hadi al Ameri.
Also in the mix is ex-prime minister Nuri al Maliki, a divisive figure blamed for losing territory to Daesh and stirring sectarianism, who has cultivated ties with Iran.
While speculation swirls, the next concrete step remains completing the vote count and firming up the final makeup of Iraq's new 329-seat parliament.
Recounts following disputes in the Dohuk and Kirkuk provinces have delayed any final announcement, but officials said a full tally should be out over the next two days.