Swedish Prime Minister Stefan Lofven lost a mandatory confidence vote in parliament on Tuesday, which means he will have to step down.
Voters delivered a hung parliament in the Sept. 9 general election with Mr. Lofven's centre-left bloc garnering 144 seats, one more than the centre-right opposition Alliance.
The anti-immigration Sweden Democrats, with 62 seats, also backed the vote to remove Mr. Lofven, but it remains unclear whether they will back an Alliance government.
Mr. Lofven will remain as head of a caretaker government until a new administration is in place.
Swedish politics have been deadlocked since the general election with both mainstream blocs claiming victory and the Sweden Democrats holding the balance of power.
The speaker has four goes at picking a prime minister to form a government. If none of his choices can get enough support in parliament, a new election must be held within three months.