Independent Kerryn Phelps has the lead in a tight contest with the Liberals' Dave Sharma.
With 40 per cent of votes counted, the Australian Electoral Commission had Dr Phelps ahead on a two-candidate preferred basis at 50.9 per cent to Mr Sharma's 49 per cent.
Dr Phelps holds the traditional blue ribbon seat by a slim margin of 1.1 per cent after winning in an October by-election to replace former prime minister Malcolm Turnbull.
But the Liberals were privately confident going into the election of reclaiming the seat in Sydney's wealthy inner suburbs.
Mr Sharma told Sky News that it was too close to call.
"I've been encouraged by the mood on the ground today but we're going to have to wait and see."
Since narrowly losing the by-election, Mr Sharma has continued campaigning, positioning himself as a moderate voice in the party who believes more action is needed to address climate change.
Liberal senator Arthur Sinodinos said: "I think the Malcolm effect has flowed through. There may be an irony in some very safe seats that Bill's campaign around the big end of town may actually have rebounded in the sense it may have caused some well-heeled voters, who might otherwise have contemplated a change, to actually vote Liberal because of either hip-pocket issues or their concern about the economic environment under a Shorten government."
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