Early results show the Democrats taking at least three Senate seats, in Rhode Island, Pennsylvania and Ohio, as counting continues in the US mid-terms.
A woman counts votes in Portland, Oregon
However several key races remain too close to call as polls close across the country, amid reports of high turnouts.
Glitches have been reported with electronic voting machines, forcing polling to be extended in some places.
The election results will define the course of Republican President George W Bush's last two years in office.
The Democrats focused on voters' anger over the Iraq war during their campaign, while the Republicans stressed their own stance on security.
EARLY DEMOCRAT GAINS
HOUSE OF REPRESENTATIVES:
435 seats - all being contested
Republicans hold 229 seats; Democrats 201; one seat independent; four vacant seats
Democrats need to win net 15 seats to win control of House
100 seats - 33 being contested
Republicans hold 55 seats; Democrats 44; one independent
Democrats need to win net six seats to win control of Senate
With projected results coming through, Democratic hopes have been bolstered by wins bringing them closer to their target of six net Senate seats.
In other major wins, two key Republican House seats in Indiana, and one in Kentucky, are also expected to pass to the Democrats.
House Democratic leader Nancy Pelosi told activists in Washington DC that the party was "on the brink of a great Democratic victory".
In Pennsylvania, Democrat Bob Casey Jr beat one of his party's biggest Republican targets this year, arch-conservative incumbent Rick Santorum.
A woman counts votes in Portland, Oregon
In Ohio, where the Republican Party has been hit by scandal, Democrat Sherrod Brown won a decisive victory over incumbent Republican Mike DeWine.
The Senate seat in Rhode Island has gone to Democrat Sheldon Whitehouse after a closely-fought battle with incumbent Republican Lincoln Chafee.
In New Jersey, Democrat incumbent Senator Bob Menendez has succeeded in holding off a strong challenge from the Republicans' Thomas Kean. The race had been seen as the Republicans' best chance of picking up a seat from their rivals.
The Senate race in Virginia, where Democrat Jim Webb is challenging incumbent George Allen, remains too close to call, according to US media reports.
The Senate seat in Connecticut has gone to Joe Lieberman, who stood as an independent after losing the Democratic primary to Ned Lamont amid strong anti-war feeling. He has said he will align himself with the Democrats.
"Certainly the early indications look good but I think we're all prepared to stay up all night and watch to make sure," Democratic Party chief Howard Dean told CNN.
Meanwhile, Democrat Keith Ellison has been elected as the nation's first Muslim member of Congress, taking a House seat in Minnesota.
And in Massachusetts, Democrat Deval Patrick has taken the governorship. He becomes the first black governor of the state and only the second elected black governor of any state.
Appeal to voters
President Bush, with his wife Laura alongside him, cast his vote early on Tuesday at a fire station in Crawford, near his Texas ranch.
He urged voters, whatever their affiliation, to "do your duty, cast your ballot and let your voice be heard".
Senator Hillary Rodham Clinton - who cast her own vote alongside former President Bill Clinton - has strolled to re-election in New York, as expected. Her win opens the way for a potential presidential run in 2008.
Meanwhile, the Clintons' daughter Chelsea was turned away from a Manhattan voting booth because she was not on a list of registered voters.
Her name had been sent to the wrong polling station, and she was offered an "affidavit vote" which will be counted later once her details are confirmed.
A national exit poll for the Associated Press indicated that about two-thirds of people felt Iraq was very important to their vote.
Yet even more voters - about 80% - said the economy, government corruption and scandal were very important to their votes, the survey of 8,344 voters said.
Glitches delayed voting in dozens of precincts in Indiana and Ohio.
WHEN KEY POLLS CLOSE (GMT)
2300: Parts of Indiana, Kentucky
0000: Virginia and Indiana*
0100: Tennessee, Pennsylvania*, New Jersey, Missouri, Maryland, Illinois*, Florida, Connecticut
0200: Texas, South Dakota, Rhode Island, New York, Minnesota, Colorado
* States in which some precincts have extended voting hours
Officials extended polling hours in six states because of problems with electronic voting machines.
The new voting technology has been brought in to replace older systems, such as the punch-card machines which were at the centre of the Florida dispute during the 2000 presidential election.
In Virginia, election officials told ABC News the FBI was investigating claims of voter intimidation.
A clear-cut result would mean none of those difficulties would matter, says our correspondent in Washington, but if the result is too close to call there could be plenty of room for disputed recounts and litigation, he adds.
KEY SENATE RACES
Correspondents say that Democratic control of even one house of Congress could mean legislative gridlock.
It would enable the Democrats to hold greater influence on Congressional committees, launch investigations into the war in Iraq, limit spending in Iraq and stall other Bush administration policies.
Voters are also choosing governors in 36 states.
The BBC News website is carrying Senate, House and gubernatorial results as they break, plus analysis and full TV coverage.