With approximately 95% of the state's precincts counted, political newcomer Youngkin held a three-point edge over McAuliffe, a longtime Democratic fixture who served as the state's governor from 2014 to 2018.
The race had tightened throughout the evening as more votes were tallied, but Youngkin appeared headed for victory. At Youngkin's election night rally, some supporters were chanting "Call it," urging media outlets to project the Republican as the winner.
A McAuliffe loss in Virginia would signal trouble for President Joe Biden's Democrats after he won by a double-digit margin over Republican then-President Donald Trump last year. McAuliffe saw his lead in public polls evaporate in the campaign's closing weeks.
At his own event shortly after 10 p.m., McAuliffe said the race was not over.
"We're going to continue to count the votes because every single Virginian deserves to have their vote counted," he told supporters.
The Republican candidates for lieutenant governor and state attorney general were also leading their races in Virginia, while Republicans appeared poised to recapture control of the state's House of Delegates. The state Senate, which Democrats control, did not have any elections this year.
Cultural issues dominated the gubernatorial race, with Youngkin promising to give parents more control over how public schools handle race, gender and COVID-19 protocols, and McAuliffe vowing to protect abortion access and voting rights.
Polls leading up to Election Day showed that Youngkin closed the gap with McAuliffe by appealing to independent voters - a group that was alienated in 2020 by Trump's firebrand style of politics but was more drawn to Youngkin's congenial manner - despite McAuliffe's attempts to tie Youngkin to the former president.
"Comparing him to President Trump really didn't resonate with me," Jacob McMinn, a program manager at a defense contractor, said after casting his vote for the Republican in Fairfax, just outside Washington.
McMinn, 38, said he supported Youngkin's view that schools should not teach "critical race theory," a law school concept that maintains racism is ingrained in U.S. law and institutions and that legacies of slavery and segregation have created an uneven playing field for Black Americans.
Schools say they do not include the theory in elementary and high school curriculums but are trying to respond to the needs of an increasingly diverse U.S. population.
Youngkin's strategy could offer a road map https://www.reuters.com/world/us/virginia-governors-race-could-show-way-republican-congressional-campaigns-2021-11-01 for Republicans trying to woo back suburban moderates in the 2022 elections, where control of Congress and the fate of Biden's agenda will be at stake.
Trump's role in the race still loomed in the minds of many voters after the former president endorsed Youngkin, a former private equity executive.
"He had Trump supporting him and I'm like out the door," Alicia Prieto, 57, said after casting her ballot for McAuliffe in Fairfax.
Voters cited the economy as their top concern, according to a CNN exit poll, ahead of education, taxes and the pandemic.
The winner will succeed Democratic Governor Ralph Northam, who is barred by Virginia's term limits law from serving two consecutive terms.
The race is one of numerous contests before American voters on Tuesday as they grapple with the COVID-19 pandemic, racial injustice and rising consumer prices.
In the other governor's race in New Jersey, Republican challenger Jack Ciattarelli, a former state lawmaker, was leading heavily favored Democratic Governor Phil Murphy, but some Democratic strongholds were still uncounted.
Dozens of major U.S. cities were also choosing mayors, including Atlanta, Minneapolis, Boston, Miami, Cincinnati, Detroit and Seattle.
In New York, Brooklyn Borough President and former police Captain Eric Adams, a Democrat, will become the city's second Black mayor after easily beating Republican Curtis Sliwa, the founder of the Guardian Angels civilian street patrol.
A year and a half after George Floyd, a Black man, was murdered by a white policeman, Minneapolis voters rejected a ballot measure that would have replaced the police department https://www.reuters.com/world/us/minneapolis-voters-decide-scrapping-police-department-18-months-after-george-2021-10-31 with a new public safety agency.
Virginia's gubernatorial race has long been viewed as a crucial barometer of the president's national standing - and a preview of the following year's midterm elections.
Biden's approval ratings have fallen to the lowest level of his presidency, according to the latest Reuters/Ipsos national poll, conducted last Wednesday and Thursday.
Youngkin, 54, campaigned as an advocate for parents who want more say in their children's education, capitalizing on anger among some conservatives who believe schools are imposing divisive curricula in the name of diversity.
McAuliffe, 64, has sought to tie Youngkin to Trump at every turn, attacking the Republican for initially hesitating to say whether Biden won the election legitimately.
While Youngkin has acknowledged Biden's victory, he called for an audit of Virginia's voting machines, a move that prompted Democrats to accuse him of validating Trump's baseless election conspiracy theories.
Youngkin walked a fine line on Trump, mostly avoiding discussion of the former president while campaigning on issues like public safety and education that appeal both to moderates and Trump supporters.
In a series of statements, Trump took credit for Youngkin's lead, thanking his "base" and adding: "Without you, he would not have been close to winning."