The PSOE received 28.1% of votes, which would land them 116-121 of the 350 seats in parliament, according to a telephone poll carried out by GAD3 on behalf of Spanish national broadcaster RTVE.
Incumbent Prime Minister Pedro Sanchez, a member of PSOE, would once again need the support of left-wing Podemos and Catalan pro-independence parties in order to form a government.
The poll predicts 69-73 seats for the conservative Popular Party (PP), 48-49 seats for center-right Ciudadanos, 42-45 for Podemos and 36-38 for far-right party Vox.
It would be the first time that a far-right party has had such electoral success in Spain since 1982.
While no exit polls were conducted, RTVE commissioned a telephone poll involving 12,000 interviews to get an early idea of results.
Voter turnout was higher than in 2016, according to government officials.
At 6 p.m. local time (12 p.m. ET) turnout was 60.75%, an increase of 9.54% over the 2016 elections, which saw turnout of 51.21%.
In Catalonia the turnout at 6 p.m. was 64.20%, almost 18 points more than the last general election in 2016.
Turnout was high despite this being the third election in four years as Spain battles mounting political instability.
As in several other European countries, far-right party Vox has gained in popularity while traditional politics is fragmenting. Spain also has had to grapple with domestic issues such as the Catalan independence movement.
For years Spain was governed by the PP or PSOE, but Podemos, Ciudadanos and Vox have emerged in recent years, shaking up the two-party established order.
Spain is the only country in western Europe that has never been governed by a coalition government, though recent years have seen minority governments shored up by parliamentary alliances.
If there is no clear winner the elections will result in a hung parliament and a coalition government, according to Ignacio Molina, senior analyst at the Real Instituto Elcano think tank in Madrid.
Voting closed at 8 p.m. local time (2 p.m. ET) and counting is due to begin at 9 p.m., with a press conference on preliminary results scheduled for 10.30 p.m.
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