The United National Movement, led by Georgian President Mikheil Saakashvili, admitted the Georgian Dream party won Monday's elections.
The Organization for Security and Cooperation in Europe said, in a 13-page report published Tuesday, the campaign environment was marred by violence and polarization, though the election itself was viewed as competitive.
"Despite a very polarizing campaign that included harsh rhetoric and shortcomings, the Georgian people have freely expressed their will at the ballot box," Tonino Picula, leader of the short-term OSCE observer mission, said in a statement.
Demonstrations were reported in Tbilisi on Election Day, though OSCE said protests were largely peaceful.
Saakashvili was criticized for his tight grip on power since he came into office following the 2004 Rose Revolution. The president said his party would move into the opposition with the Georgian Dream victory.
"There are big differences between us," he was quoted by Russia's RIA Novosti as saying. "But democracy works that way, so the majority of the Georgian people have decided this, and we respect their choice."