It was the first time a sitting president seeking re-election had been beaten into second place in the first round. But Sarkozy backers at his campaign headquarters chanted "We are going to win", interpreting Le Pen's score as more significant than Hollande's narrow lead over the incumbent.
Before voting, opinion polls had suggested a comfortable win for the Socialist in the second round.
Le Pen, who took over the anti-immigration National Front in 2011, wants jobs reserved for French nationals at a time when jobless claims are at a 12-year high. She also wants France to abandon the euro currency and restore monetary policy to Paris.
"This first round is the start of a vast gathering of right-wing patriots," she told cheering supporters at her campaign headquarters, without endorsing either of the finalists.
"Nothing will ever be the same again."
Le Pen's unexpectedly high score reflected a surge in anti-establishment populist parties in many euro zone countries from the Netherlands to Greece as austerity and the debt crisis bite.
Jean-Marie Le Pen, visibly elated at his daughter's result, said the National Front would now focus on winning seats in June parliamentary elections. "There is a lot of hope for us," he told France 2 television as party supporters shouted "Victory!"
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