Reinfeldt made the announcement in an address to his Moderate Party Sunday night when they were witnessing the disappointing results, Xinhua reported.
“The election is over and the Swedish people have made their decision,” Fredrik Reinfeldt said.
He announced that he would be stepping down and would not fight for the position of prime minister for another term – and would also be leaving his post as Moderate Party leader.
“I will hand in my notice tomorrow. All these years under the alliance have been fantastic,” he said.
Meanwhile, Social Democrat leader Stefan Lofven is ready to lead the opposition “red-green” alliance, which narrowly beat the Reinfeldt-led centre-right government.
Preliminary results of the 2014 Swedish Parliamentary elections showed that the opposition “red-green” alliance harvested 43.5 percent votes, while the centre-right government gained 39.5 percent votes.