US Senator Ted Cruz beat billionaire Donald Trump in Iowa's Republican presidential nominating contest on Monday, upsetting the national front-runner in the race to be their party's White House nominee.
Cruz, a conservative lawmaker from Texas, won with 28 per cent of the vote compared to 24 per cent for businessman Trump. Marco Rubio, a US senator from Florida, came in third place with 23 per cent, easily making him the leader among establishment Republican candidates.
On the Democratic side, former Secretary of State Hillary Clinton was in a virtual tie with rival Bernie Sanders, a self-described democratic socialist US senator from Vermont. With 93 per cent of the precincts reporting Clinton led with 50.1 percent to Sanders' 49.3 per cent.
Former Maryland Governor Martin O'Malley, who had trouble gaining any traction in the Democratic race, planned to suspend his campaign. He was in third place with 0.5 per cent.
Cruz's win and Rubio's strong showing could dent the momentum for Trump, whose candidacy has alarmed the Republican establishment and been marked by controversies such as his calls for a temporary ban on Muslims entering the United States.
"Tonight is a victory for courageous conservatives across Iowa and all across this great nation," Cruz said, adding that the results showed that the nominee would not be chosen by the media, the Washington establishment or lobbyists.
Trump congratulated Cruz and said he still expected to win the Republican nomination.
"I'm just honored, I'm really honored," Trump told supporters. He said he looked forward to the next contest next week in New Hampshire, where polls show him ahead.
Rubio's third place finish established him as the Republican establishment's main alternative to Trump and Cruz.
"I am grateful to you, Iowa. You believed in me when others didn't think it was possible," he said.
The results could have ramifications in upcoming races.
"There is now blood in the water for Donald Trump," said Republican strategist Ron Bonjean. "Ted Cruz proved he could successfully beat back Trump attacks because he had a great ground game and identified well with evangelical voters."
Former Arkansas Governor Mike Huckabee said he was suspending his campaign for the Republican party nomination. Huckabee won the Iowa caucus in 2008.
Iowa has held the first nominating contests, called caucuses, since the early 1970s, giving it extra weight in the US electoral process that can translate into momentum for winning candidates. The caucuses are voter gatherings that take place in 1,100 schools, churches and other public locations across the Midwestern state.
The 2016 election is shaping up to be the year of angry voters as disgruntled Americans worry about issues such as immigration, terrorism, income inequality and healthcare, fueling the campaigns of Trump, Sanders and Cruz.