Portugal's governing Socialist party declared victory in Sunday’s Azores regional election but lost its absolute majority in the islands’ parliament.
The result is a blow to Prime Minister Antonio Costa in his first test at the polls since the COVID-19 pandemic.
The Socialist Party (PS) has governed the archipelago for 24 years and had held an absolute majority in the region's Parliament for two decades.
The president of the Azores government, Vasco Cordeiro, said the party's victory was "clear and unequivocal" but recognised the new "challenging parliamentary framework".
On Sunday, the party recorded its worst performance in that time, falling seven points to 39.1 percent of the vote.
Meanwhile, the far-right Chega ("Enough") party won its first two seats in the island's Parliament in a historic result.
André Ventura, from Chega, assured that "the last thing he wants" is to see the PS governing the archipelago.
The party's national leader, André Ventura, said that the Azores were breaking free from socialism and described Chega's performance in the polls as an "earthquake".
Monarchist, radical-left, animal rights, and liberal parties also picked up seats, while the main center-right opposition Social Democratic Party (PSD) won 33.7 percent of the vote, rising three points.
The votes mean that the Socialists could lose control of the 57-seat assembly for the first time since 1996.
Prime Minister Costa had decided not to travel to the Azores to campaign and remained on the mainland to focus national efforts on combating the pandemic.
Portugal is facing a rise in daily infections, registering a record 3,669 new cases in a single day on Saturday.
The Azores have reported only about 360 cases since the pandemic began, largely because of their low population density and the negative tests required for entry to this territory.
However, authorities enforced local measures at the polls on Sunday, including mandatory facemasks and social distancing as more than 228,000 Azoreans cast their vote.
The island's economy has been hit particularly hard by the pandemic, mainly due to the collapse in tourism and visitors to the region.