Nicola Sturgeon has led the SNP to a record third term in power at Holyrood, but failed to win a majority.
A surge in support for the Scottish Conservatives saw them overtake Labour to become the main party of opposition.
Ruth Davidson's party iwill now form the official opposition at Holyrood, following a string of election night successes.
In contrast, Scottish Labour suffered another disappointing election result, with leader Kezia Dugdale left "heartbroken" that her party has now apparently slipped into third place in the Scottish Parliament.
Ms Dugdale failed in her bid to win the Edinburgh Eastern constituency and had to rely on the Lothian list to be returned to Holyrood.
Labour also lost all of the constituencies it had held in Glasgow to the SNP, a repeat of the fate it suffered in last year's Westminster election.
But Ms Dugdale insisted she will remain as the leader of her party "no matter what".
Ms Davidson took the Tories from fourth to first in Edinburgh Central, winning the seat from the SNP.
The Tories made another gain from the SNP in Aberdeenshire West, where Alexander Burnett ousted Dennis Robertson, while Scottish Conservative deputy leader Jackson Carlaw and Oliver Mundell, the son of Scottish Secretary David Mundell, won the Eastwood and Dumfriesshire seats from Labour respectively.
The Liberal Democrats made some gains, with their leader Willie Rennie winning the North East Fife constituency, while children's charity worker Alex Cole-Hamilton was elected as the new MSP for Edinburgh Western, taking the seat from the SNP.
READ MORE: Live: Scottish election 2016
But the Scottish Greens overtook the Lib Dems to become the fourth largest party at Holyrood, after returning a number of MSPs on the regional lists.
Green co-convener Patrick Harvie was elected in Glasgow, while the party now has two MSPs from the Lothian region.
Holyrood's youngest ever MSP is also a Green, with 21-year-old Ross Greer elected via the West of Scotland list.
Speaking after watching Labour's vote crumble across Scotland, Ms Dugdale said: "It's not clear yet who's come second and third, although the direction of travel seems to suggest that the Tories are going to become the official opposition in Scotland."
Asked how that made her feel, she added: "Heartbroken, without question. You can see from the reaction of the Tories that they are indeed surprised about how well they've done tonight."
Ms Dugdale said: "This election was always going to be tough for the Scottish Labour Party, just a year after a painful general election defeat.
"But I am proud that our campaign rose to the challenge of offering an alternative vision of what could be done in our new, more powerful parliament."
But with the constitution now a key issue in Scottish politics, she said her "determination to try to move the Scottish debate on" from the arguments of the 2014 independence referendum had cost Labour votes.
She added: "There's no doubt that our defeat for the Labour Party is painful, but it is not the end of our campaign. We will continue to argue for Labour values, Labour ideas and Labour principles.
"The work to renew the Scottish Labour Party so it is fit to serve the people of Scotland continues."
David Mundell said it would be "good for Scotland, good for the Scottish Parliament" to have the Tories as the official party of opposition.
The Conservative MP said: "Ruth has demonstrated throughout this campaign that she is the one politician that can go toe-to-toe with Nicola Sturgeon, that she can stand up to demands for a second referendum.
READ MORE: Live: Scottish election 2016
"She can also scrutinise the SNP and make sure they deliver on promises they have made on health, on education, and I think by doing that we will get better government and that will be good for everyone in Scotland."
He added: "It will be a seismic change in Scottish politics that the Scottish Conservatives are the second party in the Scottish Parliament.
"I was a candidate back in those first elections in 1999, it would have been incredible to think the Scottish Conservatives could have finished ahead of Labour and be the official opposition. It demonstrates that Ruth has transformed our party in Scotland, taken it forward and given us, I hope, a very significant role in the next Scottish Parliament."
The Tory campaign had focused on providing a strong opposition to the SNP, and Ms Davidson said: ''I fully recognise and understand there are many people that have given us their vote for the very first time, not because they're true blue Conservatives, but because there's a job of work they want us to do.''
She hailed her victory in Edinburgh Central as an ''incredible result'', and added: ''I hope the message that was resonating was of being a strong opposition, to hold the SNP to account, to saying no to a second independence referendum, to respect the decision that our country made, and to really focus on the things we're paying a government to focus on, on schools, on hospitals, on public services. That's what people want.''
Early indications that it could be a bad night for Ms Dugdale's Labour were apparent from the second seat to be declared.
Labour lost the Rutherglen constituency which it had held since 1999 to the SNP, with mental health nurse Clare Haughey elected as the new MSP for the area.
READ MORE: Live: Scottish election 2016
Seats which had previously been considered part of Labour's heartlands also fell to the nationalists, including Motherwell and Wishaw, and Greenock and Inverclyde.
Former Labour leader Iain Gray managed to hold on to his East Lothian constituency, but the party's current deputy Alex Rowley lost the Cowdenbeath seat that he had won in a by-election, and was returned to Holyrood via the Mid Scotland and Fife list.
Veteran Labour MSP Jackie Baillie held on to the Dumbarton constituency she has represented since 1999, but with a majority of just 109 over the SNP.
But Labour did enjoy a rare gain from the SNP in Edinburgh Southern, where Daniel Johnson won the seat for the party.
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