Justin Trudeau's Liberal Party is set to form a minority government after Monday's federal election, official results showed.
That means the incumbent Prime Minister will have to rely on support from other parties to govern
The Liberal Party is currently projected to win 155 seats, whereas it would need 170 to have a majority. Its Conservative rivals would win 122 seats, according to Elections Canada.
"The (results) suggest that Mr Trudeau will require the support of leftist opposition parties to enact important pieces of legislation," said analyst Karl Schamotta, Director of Global Markets Strategy at Cambridge Global Payments.
"The strongly environmentalist, anti-corporation and social spending-friendly New Democratic Party is likely to assume the king-maker role," Schamotta continued.
Yet the NDP had a disappointing night, as the number of seats it was projected to win was down sharply from the 2015 election.
The Bloc Quebecois Party came third with 32 seats - more than three times what the party won in 2015.
The Greens, who have assailed Trudeau for not doing enough to combat climate change, also made gains on Monday.
US President Donald Trump congratulated Trudeau early on Tuesday for a "hard-fought victory."
Trudeau, once a political rockstar, won power four years ago at age 43 with a strong parliamentary majority.
He is viewed as one of the last remaining progressive leaders in the western world but his image was tarnished by scandal.
"The hype was so great when he ran before, it would be hard to match that," said Jonathan Rose, a political science professor at Queen's University. "The burden of governing both wore him down and wore voters down."
He was endorsed by former Democratic US President Barack Obama in the final stretch of the campaign.
But the liberal image of Trudeau, who has championed diversity as prime minister, took a severe blow when pictures emerged early in the campaign of him wearing blackface in the early 1990s and in 2001.
Trudeau had already been wrestling with the fallout from accusations he pressured his justice minister to help shield engineering firm SNC-Lavalin Lavalin Group Inc from corruption charges. In August, a top watchdog said Trudeau breached ethics rules.