Incumbent President Kolinda Grabar-Kitarovic is behind him with 25.63 per cent, while independent candidate Miroslav Skoro was on third place with 24.26 per cent, reports Xinhua news agency.
The other eight candidates were far behind, with the fourth-place candidate winning 6.23 percent.
Grabar-Kitarovic is running for the second five-year term as the candidate of Croatian Democratic Union (HDZ), the ruling centre-right party.
Milanovic is backed by the centre-left Social Democratic Party (SDP). Skoro is a popular singer who is running as a right-wing Independent candidate.
Croatian Parliament Speaker Gordan Jandrokovic, member of the ruling HDZ, said that they are very optimistic regarding the second round.
"We believe that Grabar-Kitarovic will win in the second round, but it will be a difficult race," Jandrokovic told Nova TV.
Croatia's president is elected by a majority vote every five years. If none of the candidates obtain over 50 per cent of the vote in the first round of voting, a second round will be held on January 5, 2020.
A record number of 24,270 observers are overseeing the work of electoral committees on Sunday.
According to the State Electoral Commission (DIP), a total of 1.343 million or 38.82 per cent of eligible voters had cast their ballots on Sunday.
The final official results will be announced on Monday.
( With inputs from IANS )