Prime Minister Benjamin Netanyahu was on course to secure a right-wing governing coalition, according to Israeli TV exit polls broadcast after voting ended on Tuesday.
Both he and his main rival, Blue and White leader Benny Gantz, claimed victory after the polls showed that Gantz's center-left Blue and White Party and Netanyahu's right-wing Likud had won about the same number of seats, 36, although according to one exit poll Blue and White won four more seats.
Netanyahu declared he had achieved a "clear victory" and said he would once again secure a Knesset coalition and stay on as prime minister.
Gantz also tweeted "we won," presumably indicating he would try to make small right-wing and haredi parties defect. Gantz would most likely have to rely on Arab parties to support him as well.
Another option, which has become the most practical according to some analysts, is a unity government.
But with neither party capturing a ruling majority in the Knesset, the polls, on the country's main TV channels, put Netanyahu in a stronger position to form a government with the help of right-wing factions.
Netanyahu, in power consecutively since 2009 after a first term from 1996 to 1999, is fighting for his political survival. He faces possible indictment in three corruption cases in which the right-wing leader has denied any wrongdoing.
If he forms a government, Netanyahu, 69, will achieve a record fifth term and become Israel's longest-serving prime minister this summer.
Netanyahu's closest rival in the campaign was Gantz, a former chief of general staff. Gantz's center-left bloc of parties, Blue and White, which includes other former generals, has tried to challenge Netanyahu's national security credentials.
Election Day is an official holiday in Israel, and Netanyahu paid a visit to the Mediterranean seashore near Tel Aviv to urge beach-goers to head to the polling stations and vote for him.
Otherwise, he said in a beach video he posted on Twitter, Likud supporters enjoying a day out will "wake up Wednesday morning" and find a "left-wing" prime minister in his place from Gantz's party.
In a further tweet, Netanyahu said he was calling an emergency meeting with his campaign officials to discuss what he described as lower voter turnout in Likud strongholds compared with a strong voting percentage in "left-wing bastions".
Political commentators have dubbed similar warnings by Netanyahu as a "gevalt" strategy, a Yiddish expression of alarm, aimed at motivating complacent supporters.
Virtually every party in Israel made a similar plea to voters, telling them they are potentially handing over power to their rivals by choosing to enjoy a day off rather than go to the polling booth.
The Central Elections Committee put overall turnout, some four hours before polls close, at 2.5 percentage points lower than at the same time during the previous national ballot in 2015. It was also lower than the 2013 levels for the equivalent period.
After an election eve visit to the Western Wall on Monday evening, Netanyahu, 69, voted at a polling station in Jerusalem on Tuesday morning, accompanied by his wife, Sara.
"This is truly the essence of democracy and we should be blessed with it," he said, shaking hands with election officials and posing for selfies. "With God's help, the State of Israel will prevail. Thank you very much. Go to vote."
Casting his vote in Rosh Haayin near Tel Aviv, Gantz, 59, said: "This is a day of hope, a day of unity. I look into everyone's eyes and know that we can connect."
After the election, Israeli President Reuven Rivlin will consult the leaders of every party represented in the Knesset and select the person he believes has the best chance of forming a government.
But the victor may not be decided immediately. No party has ever won an outright majority in the 120-seat parliament, meaning days or even weeks of coalition negotiations lie ahead.
One factor may be the turnout of voters from Israel's 21% Arab minority.
Voting in a predominantly Arab neighborhood in the northern Israeli city of Haifa, Arab legislator Ayman Odeh, who heads the Hadash party, said that engagement was key to bringing about political changes that would benefit the Arab community.
"We have to vote ... we need to come in droves by train, bus, car and any other way to vote and make a crucial contribution to topple the right-wing government, and especially Benjamin Netanyahu," he said.
"It is very important that Arabs vote for the party that represents their values 100%, not 80 or 40% like other parties," he said.
Some Arabs have indicated they will vote for left-wing or centrist Israeli parties instead of party lists dominated by Arab candidates.
Voting at a polling station in Rosh Haayin near Tel Aviv, Yaron Zalel, 64, said he supported Gantz.
"Netanyahu did a lot of great things for Israel, really, a lot of great things. But he is 13 years in power and enough is enough," he said.
"He has had enough, he did enough. Now when he feels his earth, the political earth, is shaking, he is destroying everything. This has to be stopped. I am here for my kids and the next generations. There is no one who can't be replaced."
Backing Netanyahu was another voter at the same polling station, Avi Gur, 65, a lecturer at Ariel University, which is in Samaria.
"Very excited, very excited. I hope that the Right will win," he said, adding that the Likud leader was "the best prime minister there has ever been" in Israel.
"We are leading in high tech, we are leading in security, we are leading in the economy now. That's good."
In Jerusalem, Ronza Barakat, a librarian belonging to Israel's Arab minority, said she backed the left-wing Meretz party.
"I voted for them hoping for change, a change in the racism that exists here," she said. "We live together in a place of peace, why should hate exist between people?"
With little policy daylight between the two main candidates on issues such as Iran and relations with the Palestinians, much of the voting will be guided by judgments on character and personality.
