The conservative Popular Party has won the most votes while still falling short of a majority. Far-left Podemos came in third after the Socialist Party, putting an end to Spain's two-party system.
With more than 80 percent of the votes counted, results show Prime Minister Mariano Rajoy's Popular Party won the election but failed to clinch a majority of seats. The Socialist Party, meanwhile, came in second, far-left Podemos finished third and centerist party Ciudadanos came in fourth.
Complete results are expected by late Sunday night.
Podemos' Political Secretary Inigo Errejon said that the country's two-party politics had come to an end at a press conference following exit poll results.
"We have closed a historic political era in our country, an era of bipartisanship," said Errejon.
Voter turnout at Spain's general elections on Sunday exceeded more than 58 percent, slightly up from 57.7 percent at the last such elections in 2011.
The political climate in the country has shifted as newcomers Podemos and Ciudadanos made significant gains at the polls, ending a nearly three-decade long tug-of-war between the ruling Popular Party (PP) and veteran opposition Socialist Party.
"The two-party system is coming to an end," said 26-year-old engineering student Victor Beltran, after voting for the far-left party Podemos in Madrid, according to Reuters news agency.
"I know that the party I voted for will not get a majority, but I want to see how the parliament works with several strong parties that have to reach consensus," Beltran added.
History in the making
Spain has struggled with high unemployment rates - coming second in the EU behind Greece - despite it having one of the fastest-growing economies in the 28-nation bloc.
While Rajoy has claimed credit for steering the country out of an economic recession, leaders of the startup parties Ciudadanos and Podemos have described the mainstream parties, especially the right-of-center PP, of being out of touch with citizens' issues.
Albert Rivera, head of the business-friendly Ciudadanos and youngest out of the four party leaders, said Spain was entering a "new era."
Young Spaniards "didn't experience the first democratic transition [and] are experiencing a second one," Rivera said after casting his vote in a working class suburb of Barcelona.
Pablo Iglesias, the leader of far-left Podemos, echoed similar sentiments, hailing Sunday's vote as "historic."
Spain "is going through a new transition," Iglesias told supporters as he cast his vote in a working class neighborhood in Madrid. "After tonight, I am sure the history of our country will change," Iglesias added.
ls/jlw (AP, Reuters, AFP, dpa)