The Conservative expected failure to secure a majority plunges Britain into a political crisis just days before Brexit negotiations are due to begin.
The stunning election night result leaves the PM facing calls to quit as a hung Parliament looms.
So what happens next?
- What is a hung parliament?
Prime Minister Theresa May needed to retain 326 seats to deliver a majority Conservative government in the 650-seat House of Commons.
The lack of a clear winner means parliament is "hung" - effectively no party can govern on its own.
Traditionally, the party that claims the most seats will enter into talks to form a coalition or rule as a minority government with help from other parties.
But if they cannot get that support it potentially opens it up to rival parties to get together to try to govern or demand another election.
- How can the Conservatives stay in power?
Can any party govern? ITV News election analyst Jane Green explains above
The Conservatives can continue to govern as a minority government with the support of other smaller parties in the Commons, most likely the DUP.
Google has said the Northern Irish party was the subject of the most searches as the election results came in.
Rather than form a majority coalition, such as the one the Tories formed with the Lib Dems in 2010, Mrs May's party could make a looser "confidence and supply" deal with allies.
ITV News Political Correspondent Carl Dinnen said the DUP were open to negotiations.
Such an arrangement would leave the Tories at the mercy of Commons support for every vote, a hugely weak position even without the impending Brexit talks.
But this is the most likely outcome as Labour, as the second largest party, would still be short of a majority even if it formed a coalition of minority parties with the SNP and the Lib Dems.
- Does Theresa May have to resign?
No, although her position is hugely compromised after she framed the snap election as a pursuit of a personal mandate for Brexit talks.
She is officially entitled to remain in office and living at Downing Street until the formation of a new government is decided.
Mrs May said if her party secures the most seats and votes it should continue to attempt to govern.
"It will be incumbent on us to ensure that we have that period of stability, and that is what we will do," she said after being re-elected in Maidenhead.
But she may soon decide her own position is untenable.
- Will Mrs May quit?
Former chancellors George Osborne and Ed Balls, analysing the election for ITV News, interpreted the prime minister's constituency victory speech as a "holding position" as a potential leadership race looms.
However ITV News Political Editor Robert Peston said he understands Mrs May does not intend to resign and is discussing how to form a government.
- If she does, who could replace her?
Mr Peston earlier predicted a two-horse race between Boris Johnson and David Davis if Mrs May does stand down.
He said he believed the foreign secretary and Brexit secretary are the only "credible candidates" to replace her as Conservative party leader.
He said Home Secretary Amber Rudd's challenge had been undermined by too thin a majority in her constituency.
- What are the time pressures to sort it all out before Brexit talks?
An incumbent Government has until the meeting of the new Parliament to see if it can put together a deal to stay in power and prove it still commands the confidence of the Commons heading into Brexit talks.
The EU's chief Brexit negotiator Michel Barnier has set June 19 as his favoured date for the start of talks which are expected to last around 14-18 months.
However Brussels officials have indicated talks could be pushed back in the event of a change of government but the delays could compromise Britain's attempts to do a deal within the two-year time frame.
Britain is due to finalise a withdrawal deal by March 29 2019, exactly two years after the Article 50 Brexit process was triggered.