Estonia's liberal Reform party leader Kaja Kallas on Monday lost a confidence vote and failed to form a government one month after winning a hung election.
Only the Social Democrats agreed to accept the 41-year-old lawyer's invitation for coalition talks after the March 3 ballot.
Fifty-three lawmakers voted against her while 43 voted for. President Kersti Kaljulaid now has one week to choose a new candidate for prime minister.
Former premier Juri Ratas, the leader of the runner-up centre-left Centre Party, could win a confidence vote if asked to form a government.
He has already signed a coalition agreement with the conservative Isamaa and the far-right EKRE. Together the three parties hold 56 seats in the 101-seat parliament.
If two more attempts at forming a government fail, Kaljulaid will be required to proclaim a new general election.
Bread-and-butter issues including taxation and public spending dominated the March vote in the 1.3 million-strong country known for its IT savvy, solid economic growth and the eurozone's lowest debt-to-GDP ratio.