Sen. Sanders told supporters in the state that the primary was “a virtual tie,” adding that “what Iowa has begun tonight is a political revolution.”
The result was a blow for the self-proclaimed “democratic socialist,” as Iowa had represented one of his best chances for winning a state.
But he will have the chance to regain some momentum by winning the New Hampshire primary on February 9, where he currently leads Mrs Clinton in the polls.
The third Democratic presidential candidate, Martin O’Malley, suspended his campaign after winning 0.5 per cent of the Iowan vote.
In the Republican caucuses, Texas Senator Ted Cruz defeated billionaire businessman Donald Trump with 27.7 per cent of the vote, compared to Mr Trump’s 24.3 per cent.