As of early Thursday Democrat Gregoire led by fewer than 15,000 votes 980,190 to 965,867, a difference of less than 1 percentage point.
Both campaigns were closely watching the 39-county tally that could take a week or two to complete.
The candidates stayed out of sight Wednesday, spending time with their families. Before retiring for the night, both told supporters they were confident of victory.
It's apparently the closest gubernatorial finish in state history, said John Pearson of the state elections division.
"We're in fairly unprecedented territory here," Pearson said.
Libertarian Ruth Bennett (search), who got 2 percent of the vote, told The Daily News of Longview she tailored her campaign to draw votes from Gregoire in an attempt to get the major parties to pay more attention to her party's causes.
"That's what I was aiming to do, and that's what it looks like I did," Bennett said.
"I think it's too early to say what impact a candidate had until the ballots are counted," countered Gregoire campaign spokesman Morton Brilliant.
The most recent cliffhanger was the 2000 Senate race, which went to the absentees and a recount. It wasn't until December that Democrat Maria Cantwell learned that she had unseated Republican Sen. Slade Gorton by fewer than 2,500 votes.
Secretary of State Sam Reed said it could take two weeks to determine the winner of the race for governor.
County officials must certify election returns by Nov. 17. A recount is automatic if the spread is less than one-half of 1 percentage point and less than 2,000 votes.
Pearson estimated that a third to a half of the outstanding ballots will be counted by week's end. Most were mailed this week; the postmark deadline was midnight Tuesday.
Also awaiting a count were about 90,000 provisional ballots, primarily from people voting at a site other than their home precinct.
Rossi's campaign cautiously predicted victory based on internal tracking polls that showed a surge in the last few days of the campaign.
"Absolutely, things are looking good," said spokeswoman Mary Lane. "The closer we got to Election Day, the better Dino's poll numbers were.
"Now we just sit it out (and wait). Initially, we expect our numbers to go down a bit. Some of the areas where we're strong, including Eastern Washington, don't count until tomorrow or Friday.
"We expect it will be up and down, up and down over the next few days. A lot of people will be speculating, because there is a vacuum. All you can do is wait for the numbers to come in."
Brilliant said the three-term attorney general was feeling and doing much the same.
"She is upbeat. Both campaigns are sitting back waiting to see what the numbers say. The race is done, the campaign is over and now we're all waiting for the absentees to be counted."
Gregoire, 57, is seeking to become the second woman governor in state history and the latest in a succession of Democrats to hold the highest office.
Rossi, 45, a commercial real estate agent and self-made millionaire who earned his political spurs in the state Senate by crafting a no-new-taxes state budget during a deep recession, trailed in the polls for months. His internal polls showed him in a dead heat in the final week, but other polls had indicated a Gregoire victory.
Gregoire led in only eight of the 39 counties, most notably by about 110,000 votes in populous King County. Rossi led throughout Eastern Washington and in Pierce, Snohomish, Clark and Kitsap counties.