The leadership of the Blue and White Party conceded the election to Prime Minister Benjamin Netanyahu's Likud party on Wednesday.
"We respect the decision of the people," said Blue and White party head Benny Gantz.
With more than 97% of the votes counted, Likud (26.83%) was ahead of Blue and White (26.47%) by a mere 15,205 votes.
However, given the poor showing of other left-wing parties, such as Labor and Meretz, there was no clear path forward to put together a 61-seat ruling coalition in the 120-seat Knesset.
Nevertheless, Gantz touted his party's "extraordinary" showing in the election.
"We reached an extraordinary result. Over a million people chose a ballot slip of a faction they did not know existed 10 weeks ago," he said. "We established a true alternative to the government."
Blue and White co-leader Yair Lapid vowed to hold together the alliance between his Yesh Atid party and Gantz that formed several weeks ago, while promising to resist a Netanyahu-led government in opposition.
"In the opposition, we will make things miserable for the government. The days are over when the opposition just tried to crawl its way into the government," he said.
"The Knesset will be a battleground," he stated.
Lapid also said Blue and White would be preparing for future elections if Netanyahu is indicted later this year by Attorney General Avichai Mendelblit.
"The 2020 campaign began today," he said.
President Reuven Rivlin is expected to meet with party leaders next week to hear recommendations for who should form the next government with Netanyahu, now officially the clear front-runner.
