Parties of the ruling coalition suffered losses
Parties belonging to the national government coalition have lost about 12% of their regional seats, news agency AP reported.
The right-leaning Leefbaar Nederland (Liveable Netherlands) was the major winner, AP says, scoring landslide victories in some areas.
The movement has a strong anti-immigration agenda.
In Rotterdam, an outspoken former leader of the group is reported to have gained more than one third of the votes, making Leefbaar Nederland the largest party on the city council.
Anti-Muslim comments
Analysts say that the party - which was launched in 1998 - will now almost certainly win seats in the general election on 15 May.
Pim Fortuyn ran as the party's candidate in Rotterdam despite being ousted as its leader for making anti-Muslim comments.
He has since launched his own national party which will field candidates in the general election.
But other parties in Rotterdam have sworn not to share power with him.
Mr Fortuyn, a former sociology professor and outspoken homosexual, had to be escorted by police to the polling station to cast his vote as protesters demonstrated outside his home.
Low turnout
The turnout for the elections was 57.7% - slightly below the turnout of 58.9% four years ago.
In Eindhoven, a group affiliated to Leefbaar Nederland won nearly 19% of the vote.
The leading opposition Christian Democratic Alliance and the Greens also won small gains across the country.
The national government coalition consists of the leading Labour Party under Prime Minister Wim Kok, the Liberal VVD and the left-of-centre Democrats 66.