The electoral victory is setback for mining companies eager to push ahead with the extraction of rare earth metals under the Arctic island.
The left-wing Inuit Ataqatigiit (IA) party topped the polls in Greenland's Tuesday election, official results showed Wednesday.
With almost all ballots counted, the main opposition party won 36.6% of the votes, ousting the social-democratic Siumut party which received 29%.
IA's victory casts doubt over the future of the controversial Kvanefjeld mining complex, which lies towards the southern tip of the Arctic island. Although the party is not completely against mining, they campaigned against a project to dig up rare earth metals from what is one of the world's largest deposits.
Following the victory, IA leader Mute Bourup Egede told public broadcaster DR that they would halt the Kvanefjeld mining project.
Siumut party chairperson Erik Jensen congratulated 34-year-old Egede on his victory.
"We congratulate Inuit Ataqatigiit on their election. Now we're excited to see what the negotiations will bring in the coming days," Jensen said.
Greenland belongs to the Kingdom of Denmark — from whom Donald Trump attempted to purchase the island — but holds broad autonomy.
Mining its natural resources is seen as a means to achieve independence; however, environmental concerns over Kvanefjeld have divided public opinion.
The Siumut party was brought down partly due to contentions over the mining project, as well as internal power struggles, which triggered Tuesday's snap elections.
Kvanefjeld — which also contains uranium deposits — is a key source for neodymium, an integral component for wind turbines, electric vehicles, and combat aircraft.
Egede, as head of the strongest party, will now have the chance to form a coalition government. For a majority, they will need 16 out of 31 seats in the Inatsisartut legislature.
It is not yet clear how the election results will translate into seat allocation.
Greenland is the world's largest island yet is home to just 56,000 people, making it the least densely populated territory on Earth.