The win in Townsville means Labor can now claim to be on track to win 48 seats, a two-seat majority in the new 93-seat Queensland parliament.
The Electoral Commission of Queensland is understood to be on the verge of declaring the seat for Labor incumbent Scott Stewart following a strong challenge from the Liberal National Party's Casie Scott. That's one more than Labor needs to govern in its own right, allowing Premier Annastacia Palaszczuk to keep her promise not to do deals with anyone to hang onto power.
Treasurer Curtis Pitt is expected to be on the chopping block, amid reports he could be moved into the Speaker's role.
She is the first female Premier in Australia to be returned to office at an election.
His former deputy Deb Frecklington has already announced she will contest the leadership, with Tim Mander her potential deputy.
Mr Nicholls has stood down as LNP leader and a party room meeting will be held on Tuesday to determine who will lead the party. "I will not be seeking to continue as Leader of the LNP", he said in a statement.