Murkowski, who was thought to be a favorite against Sarah Palin-backed challenger Joe Miller, is behind some 2,500 votes with 84% of precincts reporting.
If it falls Murkowski, which would be the third senator for losses so far this year - after the Republican Bob Bennett and Republican Arlen Specter become Democratic.
Miller told the Anchorage Daily News that Palin's support was crucial.
"I am absolutely sure it was crucial," he said.
The race is being seen as a litmus test for the Tea Party, which has supported Miller, and a continuation of the battle between Palin and Murkowski family.
Palin won the senator's father, Gov. Frank Murkowski in the Republican primary four years ago. Palin said that when he won the position, appointed his daughter to replace him in DC
Murkowski Palin crashed on Tuesday night.
"I think she is out for their own interest. I do not think she is out of the interests of Alaska," Murkowski told the local newspaper as he waited in his tent for the results.
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