The PSOE claimed just under 28 percent of the votes to take 33 seats in the 109 seat assembly - 14 less than in the last elections held in 2015.
This result means that the PSOE, which has been badly damaged by the long running ERE corruption scandal, would not be able to form a coalition government even if it reached an agreement with the leftist coalition Adelante Andalusia (forward Andalusia), which won 17 seats, or the center-right party Ciudadanos, which won 21 seats.
Ciudadanos were one of the big winners on Sunday night, seeing their number of seats rise from 9 seats in 2015 to seriously challenge the right wing People's Party (PP).
The PP saw their representation in Andalusia fall from 33 seats down to 26 in what was viewed as the first big test for new PP leader Pablo Casado, who replaced Mariano Rajoy at the head of the party in July this year.
The PP has now seen its support halved since 2012 when they won 50 seats in the Andalusian assembly.
The biggest surprise of the night was the eruption of the extreme right wing party VOX, which received just 18,422 votes three years ago and claimed almost 400,000 on Sunday to win 12 seats in the regional parliament.
The results mean that the PP, Ciudadanos and VOX could in theory form a coalition government in the region. However, that would depend on whether the PP and Ciudadanos would be willing to reach an agreement with a party which campaigned with an openly xenophobic agenda and which on Sunday received the congratulations of French far-right leader Marie Le Pen.
The Andalusian elections are significant as they come just six months before Spain is due to celebrate elections for regional assemblies and town halls, as well as elections for the European Parliament.
The result is a setback for Spanish Prime Minister Pedro Sanchez, who has been in power in Madrid for six months and the PSOE's poor performance in its traditional stronghold will almost certainly convince him to try and see out his mandate until 2020 rather than call a general election to coincide with the European, regional and local elections next May.
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