Republican Gov. Christie Todd Whitman, a surprise winner as New Jersey's first female governor four years ago, struggled to avoid being upset Tuesday.
Early returns showed Democrat Jim McGreevey holding a slim lead.
"If it's as close as they're telling us, it's going to be a long night," said McGreevey spokeswoman Kathy Ellis.
With 45 percent of precincts reporting, McGreevey had 494,999 votes, or 47 percent, to Whitman's 481,130 votes, or 46 percent.
Libertarian Murray Sabrin, a 50-year-old college professor making his first run for office, had 49,737 votes, or 5 percent.
Analysts expected Sabrin, an abortion opponent, to draw votes from Whitman, who has traditionally run into problems with conservative Republicans for supporting abortion and affirmative action.
Elected in 1993, Whitman upset Democratic incumbent, Jim Florio, by promising to cut the state income tax 30 percent over three years. She did it in two years, thrusting her into the national spotlight.
In a statewide exit poll Tuesday, voters said New Jersey's economy was in good shape, and their personal finances have stayed the same or improved under Whitman.
The poll also found nearly nine in 10 said the issue of auto insurance was important in deciding whether to return Whitman to office, a topic trumpeted by McGreevey, 40, a state senator and mayor of Woodbridge.
And 95 percent said state and local taxes were important in their choice.