Illinois Rep. Paul Simon (D) defeated Sen. Charles H. Percy (R), the chairman of the Foreign Relations Committee, as the Democrats picked up two seats in Tuesday's election but left the Senate in Republican hands with a majority of 53 to 47.

In a race not decided until late into the night, Simon, running well in black and Jewish districts and in his own downstate area, defeated Percy, who was seeking a fourth six-year term in the Senate, by about 1 percentage point.

In other key races, some not decided until late Tuesday:

* Sen. Jesse Helms (R-N.C.) was reelected over Gov. James B. Hunt Jr., by about 2 percentage points.

* Moderate-to-liberal Rep. Tom Harkin (D-Iowa) ousted Iowa Sen. Roger W. Jepsen (R).

* Mitch McConnell, county judge/executive of Kentucky's Jefferson County (Louisville) whose aides describe him as "very much in the Reagan mold" on most issues, upset two-term Sen. Walter D. Huddleston (D-Ky.) by about 3,000 votes in the closest senatorial race.

Huddleston aides said he will ask for a recanvass of district totals.

But they said that Huddleston is not charging irregularities and does not expect that the recanvass will reverse the apparent outcome when completed in about a week.

* West Virginia Gov. John D. (Jay) Rockefeller IV (D) bested businessman John Raese by about 5 percentage points in the race to succeed long-time Sen. Jennings Randolph (D), who retired. According to press reports, Raese, a newspaper publisher and heir to a limestone company fortune, said, "I will never concede to anyone who has run such a corrupt campaign . . . . The only losers are the people who voted for Jay Rockefeller."

* After trailing in the popular vote most of the evening while votes from his Detroit stronghold were still unreported, liberal Democratic Sen. Carl Levin (D-Mich.) swept past former Marine colonel and astronaut Jack Lousma to win reelection by about 190,000 votes.

* In other results reported late election night, western Republican incumbents Alan K. Simpson (Wyo.), Larry Pressler (S.D.), William L. Armstrong (Colo.), James A. McClure (Idaho), Mark O. Hatfield (Ore.) and Ted Stevens (Alaska) all won reelection. Also winning in the West were Democratic incumbents Max Baucus (Mont.) and J.J. Exon (Neb.).

* Other incumbents whose bids for another term were successful were Republicans John W. Warner (Va.), Nancy Landon Kassebaum (Kan.), Thad Cochran (Miss.), Strom Thurmond (Miss.), William S. Cohen (Maine), Rudy Boschwitz (Minn.), Pete V. Domenici (N.M.) and Gordon J. Humphrey (N.H.), and Democrats Howell Heflin (Ala.), Sam Nunn (Ga.), J. Bennett Johnston (La.), who was elected earlier, Joseph R. Biden Jr. (Del.), Bill Bradley (N.J.), David L. Boren (Okla.), Claiborne Pell (R.I.) and David Pryor (Ark.).

Republicans, who captured control of the Senate in 1980 for the first time in 25 years, held a 55-to-45 edge going into the election, in which 33 seats overall were at stake.

In the balloting, Democrats took over three seats formerly held by Republicans as a result of the Harkin victory over Jepsen in Iowa, the Simon victory over Percy in Illinois and the election of Rep. Albert Gore Jr. (D-Tenn.), son of the former senator, to succeed Senate Majority Leader Howard H. Baker Jr. (R) in Tennessee, who declined to run for reelection.

However, McConnell's upset of Democrat Huddleston in Kentucky -- the only race in which Republicans picked up a Democratic seat -- left the net Democratic gain at two seats.

Seven new senators will begin their terms in January: Harkin, Simon, Gore, McConnell and Rockefeller, plus Rep. Phil Gramm (R-Tex.), who was elected overwhelmingly to succeed retiring Sen. John G. Tower (R), and Lt. Gov. John F. Kerry (D-Mass.), elected to succceed Sen. Paul E. Tsongas (D-Mass.) who declined to run because of ill health.

In the Illinois race, according to some observers and sources close to Simon, Percy was hurt by his backing for President Reagan on such issues as whether to sell airborne warning and control system (AWACS) aircraft to Saudi Arabia, economic and various other policies.

These observers said these stands cost the moderate Percy some of his traditional support among Jews and moderates without gaining him enough support among conservatives to offset these losses.

Simon, according to figures compiled by his aides, received 68 percent of the vote in Chicago, ran better downstate than Democrats usually do and cut deeply into Percy's usual percentage of blacks and Jews.

According to these figures, Percy won 55 percent of the Jewish vote in 1978 but 35 percent Tuesday, and Percy received nearly one-third of the black vote in 1978 but 7 percent Tuesday.

In Kentucky, McConnell campaign manager Joe Schiff said McConnell is "pro-life, pro-prayer in the schools and very much in the Reagan mold on economic issues." Schiff said McConnell, a onetime Senate aide to former senator Marlow W. Cook (R-Ky.), had hit Huddleston hard on his attendance record. Huddleston claimed that he had compiled a record of 94 percent in recent years, but McConnell charged that it was still among the lowest in the Senate.

In addition, McConnell had gone all-out to show that while Huddleston "talks like a conservative in Kentucky, he votes like a liberal and we nailed him on it," said Schiff. Huddleston's press secretary said Reagan's "pretty broad, pretty wide coattails were a great part" of his upset loss.

Huddleston, in a statement Tuesday night, said he thought people had somehow gotten the incorrect notion that the Democratic Party was made up of small groups of minorities and factions while it really is still a party of the working person and middle class.

In Iowa, sources close to the Harkin campaign said he won because "the recovery hasn't come home to Iowa." At the same time, "Jepsen spent six years in the mistake-of-the-month club," the sources said.

This was a reference to incidents that Harkin aides said cost Jepsen public esteem, such as his reversal of opposition to the Saudi AWACS deal, invoking a constitutional provision to avoid a traffic ticket and allegedly falling asleep at a meeting with two farmers who had driven to Washington in their tractors to see him.