"We must recognize this as an historic defeat," former defense minister and LDP lawmaker Shigeru Ishiba was quoted by public broadcaster NHK as saying.
Forces supporting Koike captured a total of 79 seats out of the 127 seats up for grabs, with Koike's Tomin First no Kai (Tokyoites First party) winning 49 seats, and its major ally in the metropolitan assembly the Komeito party securing 23 seats.
Meanwhile, Abe's ruling LDP won only 23 seats, its lowest-ever level in a Tokyo assembly election, according to local media.
The LDP has been suffering recently from a plunging public support rate for Abe's cabinet amid two school scandals implicating the prime minister as well as the ruling coalition's unorthodox way of forcing through a controversial legislation at the parliament.
Abe has been accused of using his position to make sure that a school operator, chaired by a close friend of Abe's, was selected to open a new veterinary department at a university in a special deregulated zone.
He has also been implicated in a scandal involving the school operator Moritomo Gakuen, which reportedly bought a 8,770-square-meter piece of land last June in Toyonaka, Osaka Prefecture, for 134 million yen, equivalent to only 14 percent of its appraisal price, for building a new elementary school with Abe's wife Akie as its honorary principal.
The prime minister and his ruling bloc has also drawn staunch criticism from civic groups, lawyers, opposition parties and regular citizens for forcibly enacting the controversial "conspiracy" legislation, which, while criminalizing the planning of serious crimes, could cause serious infringement upon civil liberties, according to critics.
A public opinion poll conducted by Kyodo News last month showed that support rate for Abe's cabinet dropped to 44.9 percent, down 10.5 percentage points from a survey a month earlier, with the majority of the people saying they were not convinced by the government's explanations about the scandals implicating the prime minister.
A series of scandals involving close allies of Abe's exposed recently made the situation even worse for the LDP, as opposition parties demanded Defense Minister Tomomi Inada be sacked for violating the nation's Self-Defense Forces Law, which strictly prohibits political activities by its personnel, and former education minister Hakubun Shimomura was accused of mishandling political donations.
A total of 259 candidates contended for the 127 seats up for grabs in Sunday's election, which has been viewed by many as a barometer of national politics.
The LDP backed 60 candidates in the election, while Tomin First no Kai put forward 50. Both the Democratic Party and Komeito fielded 23 candidates each, while the Japanese Communist Party endorsed 37 candidates.
Before the election, the LDP held 57 seats at the Tokyo assembly, followed by the Komeito party with 22, the Japanese Communist Party with 17, the Democratic Party with seven and Tomin First six.
Koike, Tokyo's first female governor, had been a House of Representatives lawmaker with the ruling LDP before winning the Tokyo gubernatorial election by a large margin last July without the backing of her party.
She officially quit the LDP last month and became head of the Tomin First no Kai which was formed last September by Tokyo assembly members supporting Koike.
Voter turnout of Sunday's election stood at 51.27 percent, 7.77 percentage points higher than turnout of the previous election in 2013.
