With more than 95 percent of votes counted, government spokeswoman Isabel Celaa announced the Socialist Party had come first with close to 33 percent, followed by the conservative Popular Party which won just over 20 percent.
The PSOE won 20 seats, six seats more than in the 2014 European election, and a share equivalent to more than 4 percentage points above last month’s Spanish general election.
In another devastating blow for the Popular Party, still reeling from disastrous results in the April 28th vote, the conservatives came in second place with 20.09 percent of the vote and 12 seats, four down from 2014.
The conservative vote was split by Ciudadanos who won seven votes and the new far-right Vox party, which enters the EU parliament for the first time, with three seats.
The far-left Podemos will be disappointed with just six seats, only one more than in the last election.
Former Catalan President Carles Puigdemont, who is now living in exile in Belgium won a seat as an MEP as did his former deputy Oriol Junqueras currently, currently jailed on remand in Spain and on trial with 11 others for his role in staging the illegal referendum on independence, also won a seat as an MEP as well as being elected to Spain's national parliament.
Newly-emerged far-right party Vox, meanwhile, got just over six percent of the vote.
That's less than the 10 percent it won in the general election when it burst into the national parliament.
Sanchez was hoping that the party would perform well to strengthen his preferred plan of forming a minority government with the support of other parties on a case-by-case basis when passing laws.
But he will also be looking to the European Union, where Sanchez has emerged as the big hope for European social democrats.
Spain could be the only major EU member state with socialists coming out on top in the European parliament elections.
On Friday, outgoing Foreign Minister Josep Borrell, whom Spain could push to become the next EU foreign policy chief, told supporters that Sanchez was going to “lead the resurgence of social democracy in Europe”.
Podemos or not?
On the domestic front, the results of local and regional elections may determine what Spain's new government looks like, and Sanchez has urged supporters to “finish the work” of the general election and turn out in force.
While Sanchez wants to rule alone in a minority government, Pablo Iglesias, the leader of far-left party Podemos, is pushing him to form a coalition.
Whether Sanchez accepts may depend on how both parties fare.
The Socialists “might need the support of Podemos to retain power in some regions, which Iglesias might use to pressure Sanchez into forming a coalition,” said Teneo analyst Antonio Barroso.
But “Iglesias' party is on the decline according to the most recent polls, and PSOE might enjoy a certain 'honeymoon effect' after its victory in the April legislative election.
“If the distance between the two parties widens after Sunday, Sanchez will be in an even stronger position to head a minority government.”
Polls suggest the Socialists will win in most of the 12 regions going to the polls on Sunday.
But all eyes will be on the region of Madrid, which could swing left after being governed by the PP for 24 years.
An exit poll by local television channel Telemadrid predicted that would be the case, with Socialist candidate Angel Gabilondo coming first.
It also predicted that outgoing Madrid Mayor Manuela Carmena would win again.