Pete Buttigieg is holding a narrow lead over Bernie Sanders in while former vice-president Joe Biden is trailing badly in fourth place with about 71 per cent of precincts reporting.
US Senator Elizabeth Warren is third in the results, released a day after Iowans poured into more than 1,600 public locations to begin the five-month process of picking a challenger to Republican President Donald Trump for November's election.
Mr Buttigieg, the moderate 38-year-old former mayor of South Bend, Indiana, had 26.8 per cent of state delegate equivalents, the data
Pete Buttigieg is leading the Democratic race in Iowa. Source: AP
Senator Sanders had 25.2 per cent, while his fellow progressive, Senator Warren, was at 18.4 per cent and Mr Biden at 15.5 per cent. Senator Amy Klobuchar was fifth at 12.6 per cent.
Mr Buttigieg, who would be the first openly gay US president if elected, argues it is time for a new generation of leaders and his lack of experience in Washington makes him an ideal candidate to break its partisan gridlock.
Speaking to supporters in Laconia, New Hampshire, he recalled he began the race a year ago with four staff members, no name recognition and no money.
"A campaign that some said should have no business even making this attempt, has taken its place at the front of this race to replace the current president with a better vision for the future," Mr Buttigieg said.
Jen Tomita poses for a portrait while attending a campaign event for Democratic presidential candidate Pete Buttigieg. Source: AP
The results in Iowa had been expected to provide some answers for Democrats desperately trying to figure out how to beat the businessman-turned-president.
But the Democratic candidates had already departed Iowa and turned their attention to the next contest in New Hampshire on 11 February before the first results were even released in two batches on Tuesday.
Senator Sanders, 78, was ahead in the Iowa popular vote, which is not used to determine the delegates who will cast ballots at the Democratic National Convention in July.
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Inside the chaos of the Iowa caucus
The complicated caucus rules allow for multiple votes as the backers of candidates who do not reach a 15 per cent level of viability switch to other contenders.
The Iowa chaos got the Democratic race off to a clumsy start. Officials blamed inconsistencies related to a new mobile app used for vote counting for the unusual delay in Iowa, the state that traditionally kicks off a US presidential election campaign.
The uncertainty enraged Democrats worried it would only strengthen Mr Trump's bid for re-election and prompted some Democratic candidates' campaigns to question whether the results would be legitimate.
"As leader of the party, I apologise deeply for this," Iowa state party chairman Troy Price told reporters.
"We've been working day and night to make sure these results are accurate."
Republicans asked how Democrats could run the country if they could not conduct a caucus, while Mr Trump mocked the Democrats on Twitter,
Mr Trump took a swipe at the Democrats, 11 of whom are contenders in the state-by-state battle to face him in November.
"Nothing works, just like they ran the Country," he tweeted.
