The leader of the anti-immigration FN, Marine Le Pen, lost out to the right-wing opposition in the northern Nord-Pas-de-Calais Picardie region after the ruling Socialists pulled out of the race before the second round.
Her 26-year-old niece Marion Marechal-Le Pen was also defeated by the right-wing grouping in the southern region that includes the glitzy resorts of the Cote d'Azur, despite dominating the first round last week.
Despite the defeat Marine Le Pen vowed that “nothing would stop us now” as she turns her attention to the presidential election in 2017.
The FN had topped the vote in six of 13 regions on December 6, propelled by anger over the struggling economy and fears created by last month's jihadist attacks in Paris that left 130 dead.
But exactly a month on from those attacks, voters turned out in force – some 58 percent took part – and once again trounced the FN when it came down to the wire.
The National Front party leader was less than happy after failing to win any regions despite being predicted to pick up at least one.
She lambasted France's mainstream parties in a defiant speech.
After thanking her voters, she said: “Congratulations, too, for having thrown off the indecent slogans, the campaigns of calumny of defamation that were decided upon in the gilded palaces of the Republic.”
She added that she was pleased to see “the inexorable rise, in election after election, of the national movement. By tripling the number of our regional councillors, the FN will from now on be the primary opposition force in most of France’s regional councils.”
“Nothing can stop us now,” Le Pen added.
“In its northern and southern bastions we've eradicated the evil-doing Socialist Party,” she said.
She added that France was now entering a two-party system.
“The first round left us believing in a three-party system. We are now going into a two-party system,” she said.
“Now the split isn't between left and right, but between those who favour globalisation and the patriots.”
The FN had topped the vote in six of 13 regions on December 6, but once again suffered in the second round of an election as voters rushed to support mainstream parties at the final hurdle.
The right-wing grouping, including Nicolas Sarkozy's conservative Les Republicains party appeared to have won seven of the regions, including Ile-de-France.
The election was held under tight security following the November 13 attacks in Paris in which 130 people were killed.
Despite the FN failing to grab its first-ever region, Marine Le Pen will still use her party's performance as a springboard for her bid for the 2017 presidential election.
The FN has topped European and local polls over the past two years, bolstering Le Pen's claim that it is now “the first party of France”.
It controls around 11 towns across the country.
But Sunday showed once again that the party struggles in the deciding round as mainstream voters gang up to keep it from power.
'A time bomb'
Early estimates showed Marine Le Pen scored around 42 percent to nearly 58 percent for her right-wing rival Xavier Bertrand in the economically depressed north.
Her niece scored around 45 percent to nearly 55 percent for her right-wing rival in the FN's traditional stronghold in the south.
The FN argues that the political manoeuvring by the main two political parties shows that they are two sides of the same coin and the far-right offers the only real political alternative.
“Frankly, I'm voting against the FN in the interests of my family,” said Issa Kouyate, a 59-year-old voter of Senegalese origin, as he went to cast his ballot in the southern city of Marseille, where a high proportion of citizens are of immigrant background.
“There's danger,” said Kouyate, describing the FN's 40-percent score in the region's first round as “a time bomb”.
Some were not pleased with the tactical games of the ruling party.
“Since the Socialist Party has pulled out, I feel like they've stolen my vote,” said 56-year-old Didier as he voted in the northern city of Lille.
He said he would leave his voting slip blank, though he worried about letting Le Pen win.
“If it's down to me that she wins, then I've done wrong,” he said.
The FN took 28 percent of the vote nationally last Sunday, ahead of 27 percent for the Republicans and their allies.
Le Pen has reaped the rewards of her efforts to “de-demonise” the party bequeathed by her father Jean-Marie Le Pen, but it retains a stridently
anti-immigrant edge. Critics accuse it of fomenting Islamophobia.
Her campaign has also exploited anger over the situation in the northern port of Calais, where thousands of migrants are camping in squalid conditions.
Socialist Prime Minister Manuel Valls said he had “no hesitation” in urging voters to back the Republicans to keep the FN from power — as they did in 2002 when voters switched to Jacques Chirac in a presidential run-off against Jean-Marie Le Pen.
France's regions have recently been enlarged and control key areas such as transport, schooling and local business support.