Going into the election, the opposition had sensed its best chance yet of unseating Erdogan, encouraged by polls showing him trailing Kilicdaroglu. But the results suggested Erdogan had been able to rally conservative voters despite a spiralling economic crisis.
"The winner has undoubtedly been our country," Erdogan said in a speech to cheering supporters at the headquarters of his ruling Islamist-rooted AK Party in the capital Ankara overnight.
Erdogan's People's Alliance also appeared to have won a majority in parliament, potentially giving him a crucial edge in the presidential runoff.
Kilicdaroglu, who heads a six-party alliance, vowed to win the second vote and accused Erdogan's party of interfering with the counting and reporting of results.
As the election results pointed to a runoff, Turkish stocks tumbled, the lira held near a two-month low, sovereign dollar bonds dropped and the cost of insuring exposure to the country's debt spiked.
Many of Erdogan's detractors had been hoping for a clean break with the leader's centralized economic policies and what they say has been an attack on Türkiye's democratic institutions, with thousands of political prisoners set to be freed if the opposition prevails.
Kilicdaroglu had campaigned to overturn years of state repression, return to orthodox economic policies, and rebuild frail ties with the West.
The election has also been closely watched in Europe, Washington, Moscow, and across the region, where Erdogan has asserted Turkish power while deepening ties to Russia which has put strain on Ankara's traditional alliance with the U.S.
Erdogan is an ally of President Vladimir Putin and his strong showing in the election is likely to encourage the Kremlin but concern the Biden administration, as well as many European and Middle Eastern leaders who had troubled relations with Erdogan.
Galip Dalay, associate fellow at Chatham House, said Erdogan's ruling alliance would go into the second round "with numeric and psychological advantages."
"During the campaign period ahead of the runoff, President Erdogan is likely to emphasize stability as he already retains the majority in the parliament," Dalay said.
A third candidate, the nationalist Sinan Ogan, took some 5.2 percent of the vote, and could play a "kingmaker" role in the runoff if he decides to endorse one of his two main rivals.
Türkiye's longest-serving leader has turned the country into a global player, transforming it with huge infrastructure projects such has airports and bridges and building a defense industry attracting many foreign customers.
However, the opposition had expected to benefit from voter anger at economic woes after an unconventional policy of low interest rates triggered a lira crisis and soaring inflation.
A slow government response to the earthquakes that killed 50,000 people in February had also been expected to see less votes for Erdogan's ruling party.
However, with a strong showing on Sunday, critics fear Erdogan will be able to govern more autocratically if he wins another term. The 69-year-old president, a veteran of a dozen election victories, says he respects democracy.