Taxation and public spending dominated Sunday's election in the ex-Soviet EU and NATO state, along with tensions over Russian-language education for the sizeable Russian minority and the rural-urban divide.
Reform garnered 28.8 percent of the vote, ahead of the governing centre-left Centre party with 23 percent, while the far-right EKRE more than doubled its previous election score with 17.8 percent, according to full results on Estonia's official election website.
Turnout was just over 63 percent.
Kallas, a solid supporter of the European Union, is the daughter of former Estonian Prime Minister Siim Kallas, who also led the Reform party before serving as a European transport commissioner.
She now faces the task of forming a coalition government.
“Not a choice”
Vowing to "put together the government and start running the country with common sense", Kallas said Reform would consider coalitions with three of the four other parties that entered parliament, ruling out EKRE as "not a choice for us".
She said Reform has "strong differences" with the Centre party of outgoing Prime Minister Juri Ratas in three areas: taxation, citizenship, and education.
Asked if his party would consider becoming a junior coalition partner, Ratas said "of course" but declined to elaborate.
Holding a combined 60 seats in the 101-seat parliament, the two could govern together as they have done in the past.
Meanwhile, EKRE leader Mart Helme raised the idea of a Centre-EKRE-Isamaa coalition commanding a 57-seat majority, according to the public broadcaster ETV/ERR.
Staunchly eurosceptic, the party has called for an "Estxit" referendum on Estonia's EU membership, although observers say the move would most likely fail in the overwhelmingly pro-EU country.
The party's strongly supports Estonia’s NATO membership and the multinational battalion the alliance installed in the country in 2017 as a buffer against possible Russian adventurism.
Estonia is also home to Nato’s Cyber Defence Centre that coordinates researchers and military from 21 Nato members.
Meanwhile, Estonia’s 1.3 million strong Russian minority, comprising about a quarter of the total population, has long favored the Centre party.
The minority had counted on Centre to save the existing education system which wants to maintain Soviet-era Estonian and Russian-language schools, while Reform and EKRE want to scrap Russian-language teaching.