By midday Sunday India's election commission website showed that a self-proclaimed "grand alliance" of parties opposed to Modi's Bharatiya Janata Party was leading in more than 140 seats, comfortably in sight of the 122 seats needed to control the state's 243-seat legislature.
The election for control of Bihar was seen as a referendum on Modi's popularity, and he crisscrossed the state addressing dozens of high-profile rallies. No other BJP leaders were as visible through the election as Modi.
Nalin Kohli, a spokesman for the BJP, congratulated Nitish Kumar, the leader of the winning alliance, AP reported.
"The people of Bihar have given a decisive verdict," Kohli told NDTV news channel.
Kumar, who has led Bihar for 10 years, tweeted that "the spirit & power of democracy has won."
Modi and his party swept to a stunning victory in national elections in May last year and went on to win a string on state elections soon after. Each election was seen as a reflection of Modi's charisma, with the prime minister personally leading each of the electoral campaigns. Modi's style is a departure from the norm in India, where local leaders usually lead campaigns for state elections.
But earlier this year the BJP was trounced in Delhi state elections. The dramatic loss in Bihar, where several exit polls had predicted either a tight race or a victory for the BJP, is the second major defeat for the party.
State elections decide who controls the upper house of India's Parliament. While the lower house, which the BJP controls, is significantly more powerful, the upper house is crucial for passing the legislation needed for the economic reforms Modi's government has promised.
The Bihar election is also seen as a sign that many in India are alarmed by a rising tide of religious intolerance and violence in India since Modi's rightwing party came to power.
Modi and his BJP have been criticized for not speaking out against religious attacks, saying their silence has encouraged Hindu hard-liners to justify the violence and assert Hindu superiority.