The news of Mr Ortega's election lead was reported by a radio station run by his supporters, citing a quick count projection of votes.
"Primerissima" said the projection gave Ortega just over 40 per cent of the vote, with conservatives Eduardo Montealegre and Jose Rizo getting 30 per cent and 22 per cent respectively.
Washington had urged Nicaraguans to defeat Mr Ortega, whose Sandinista government seized private assets and battled US-backed Contra rebels before he was defeated at the polls in 1990.
If he fails to win in the first round, however, Mr Ortega would almost certainly lose a runoff as conservative voters rally behind his rival.
Observers said turnout was above 70 per cent with no major problems reported.
Tension rose as Nicaraguans waited for preliminary results expected late tonight. With the country deeply divided, some feared a long wait might spark protests.
There were isolated scuffles earlier in the day and several people were arrested for trying to steal ballot boxes and hurling rocks at a polling station on the edge of the capital.
Although Mr Ortega has toned down his leftist rhetoric, Washington worries he will team up with Venezuelan President Hugo Chavez and Cuban President Fidel Castro in the anti-US bloc of Latin American leaders if he wins.
US officials have warned that US aid and investment will drop under Mr Ortega and have backed his main challenger at the polls -- wealthy former banker Eduardo Montealegre.
Still, many Nicaraguans are frustrated by the failure of often corrupt pro-market governments to fight poverty and about a third support the 60-year-old Ortega, who first seized power in a 1979 revolution against dictator Anastasio Somoza.
"He is the only one who looks out for the poor. All the others are just for the rich," said William Medina, a lawyer standing in line to vote at a Managua polling station.
On the other side of a bitter divide, conservatives remember the bloodshed, rations, hyperinflation and hard-line policies under Sandinista leaders whose alliance with the Soviet Union and Cuba helped turn the Central American nation into a Cold War battleground.
"One day they took away my son, and I never saw him again," said 66-year-old Maria Elena Sanchez crying as she recalled how her 17-year-old son was drafted by the army from their home in the central town of Masaya to join the war.
Nicaragua is the second-poorest country in the Western Hemisphere after Haiti.
It was wrecked by the war that claimed 30,000 lives and by a US embargo against the Sandinistas.
Although the economy has stabilised under three straight conservative presidents, 8 of 10 Nicaraguans still live on $US2 ($A2.60) a day or less.
Ortega needs 40 per cent of the vote, or 35 per cent and a 5-point lead, to win outright.
Opinion polls put him close to achieving that.