Far-right Congressman pulled off a thumping win in the first round of Brazil's presidential election but fell short of the majority required to avoid a second round runoff, the Supreme Electoral Tribunal has announced.
Behind Haddad came the Democratic Labor party's Ciro Gomes with 12.5 per cent.
Bolsonaro will face Haddad in the second round on October 28.
"We indeed are able to change the destiny of Brazil," Bolsonaro, 63, told the media late on Sunday night. "We cannot continue flirting with socialism or communism."
Throughout his 27-year career as a congressman, Bolsonaro has stirred controversy by making misogynistic, racist and homophobic remarks and has often been compared to US President Donald Trump and the Philippines' Rodrigo Duterte.
He has also been very vocal about his support for military rule.
In a broadcast on the eve of the election, Bolsonaro echoed Trump with a call to his 7 million Facebook followers: "Let's make Brazil great! Let's be proud of our homeland once again!", the Guardian reported.
Last month, Bolsonaro called for his leftwing political opponents to be shot. Two days later he himself was stabbed in an attempted assassination at a rally.
But in the final days of the campaign, the far-right front-runner, forced to campaign from a hospital bed, tried to recast himself as a paragon of tolerance who would rule for all Brazil's 208 million citizens regardless of their skin, colour or faith.
Meanwhile, Haddad, who spoke after making it to the second round, said he and the Workers' Party would "only use arguments, we don't use any guns", reports the BBC.
Referring to Bolsonaro's lead, he said he felt "challenged by the results, which alerts us to the risks Brazilian democracy is facing.
"We need to approach this with a sense of responsibility. We want to unite the democrats of this country, to reduce inequality and to achieve social justice," he told his cheering supporters.
Haddad became the default Workers' Party candidate after his running mate and former President Luiz Inacio Lula da Silva was barred from running by the country's highest electoral court.
da Silva had been leading in the polls despite being in jail since April, where he is serving a 12-year sentence for corruption and money laundering. He has denied the charges.
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