It was the worst electoral performance by the late Nelson Mandela's former liberation movement, which has governed South Africa since the country's first free election marked the end of white minority rule in 1994.
The ANC had not previously won less than 60% of the vote in a national poll.
The ANC's victory secures it enough seats in parliament to give President Cyril Ramaphosa another five-year term in office but may leave him short of ammunition to battle party rivals who oppose his reforms to galvanise the economy and counter graft.
"Let us now work together, black and white, men and women, young and old to build a South Africa that truly belongs to all that live in it," he said in a speech after his party was declared the winner.
Results showed the ANC secured 57.5% of the parliamentary vote, while the main opposition party, the Democratic Alliance (DA), also saw its vote share fall.
The DA picked up 20.8% and the leftist Economic Freedom Fighters took 10.8%, the Independent Electoral Commission said on its website.
In 2014, the ANC won 62% of votes, the DA 22% and the EFF 6%.
The turnout for Wednesday's vote was markedly lower than at the last election in 2014, falling to 66% from 73.5%, the electoral commission said.
The ANC's seats in the 400-member parliament fell to 230 from 249. The main opposition Democratic Alliance also saw its number of seats fall to 84 from 89, while the leftist Economic Freedom Fighters gained 19 seats to 44. South Africa uses a system of proportional representation.
The DA's communications director Mabine Seabe said the party viewed the outcome as "a positive result. We've grown in communities we've never grown before".
ANC Chairman Gwede Mantashe said the party had received "another lifeline" from voters. He said the party had improved compared with the 54% it won in the 2016 local government poll.
"So we are picking up from that disaster," he said.
But 27 smaller parties, of 48 that ran in total, alleged irregularities and threatened legal action, which the electoral commission said it would oppose. International observers said the elections were free and fair.
RAMAPHOSA "SAFE"
Ramaphosa had sought to re-engage voters whose enthusiasm for the ANC has been eroded by its faltering efforts to address corruption, high unemployment and persistent racial disparities in housing, services and land distribution.
Africa's most advanced economy remains one of the most unequal societies in the world, according to the World Bank.
The ruling party retained control of eight of South Africa's nine provinces in separate elections also held on Wednesday, with the DA keeping hold of the Western Cape, home to Cape Town, where parliament resides.
Analysts had said a poor showing by the ANC would embolden opponents of Ramaphosa and risk a challenge to his leadership.
Fikile Mbalula, a former cabinet minister who was in charge of the ANC's election campaign, said its 10 million votes were the result of hard work by its leadership. He hailed union leader turned business tycoon Ramaphosa's role in starting to undo negative public perceptions.
"People love him," Mbalula said. "And from where we were, we were battered in terms of our image and he was a game-changer for the ANC."
The 66-year-old president was "very safe" from internal challenges, he said, adding: "The ANC is very strong in protecting their leadership. Even if there are remnants trying their thing, they will not succeed."
The ANC achieved its best parliamentary election result in 2004 under former president Thabo Mbeki, when it won 69% of the vote.
DA LOSES GROUND
Election analyst Wayne Sussman said the DA lost votes to the conservative Freedom Front party, which capitalised on plans to allow land expropriation without compensation. Whites, just 9% of the 56 million population, still own more than 70% of agricultural land.
"The DA wasn't speaking enough about safety for farmers and agriculture for some voters," Sussman said.
The Freedom Front, which says it aims to protect Afrikaners' interests, campaigned under the slogan "fight back".
"In some upper-middle-class suburbs which traditionally vote DA, there was also a swing to the ANC. This can be attributed partly to the Ramaphosa effect," Sussman added.
The provisional results showed the ANC won a tight provincial race in Gauteng, where South Africa's biggest city and commercial centre Johannesburg and the administrative capital Pretoria are located, with 50.19% of the vote.
Losing control there would have been a blow to the president, who replaced scandal-plagued Jacob Zuma in February 2018.
"The race for Gauteng was nail-biting, and the last two days have been sleepless nights," said Snuki Zikalala, president of the ANC veterans' league.
"It's a lesson that we should make sure that we win back the support of the middle class and skilled people. We used to say we don't care for clever blacks, that was a mistake. Those are the people who run the economy."
