Prime Minister Abhisit Vejjajiva’s Democrats face a tough battle against the Pheu Thai party, which is allied to ousted former leader Thaksin Shinawatra and led by his sister, Yingluck.
Thailand has endured six years of often bloody political protests and there is tight security for the vote nationwide.
About 170,000 police officers have been deployed outside polling stations.
Last year, protesters shut down parts of Bangkok for two months in a bid to force the government to resign. When the army stepped in to clear the capital’s streets it degenerated into violence, leaving 91 people dead.
Many of the red-shirted demonstrators were supporters of Mr Thaksin, whose government was toppled in a military coup in 2006.
The BBC’s Karishma Vaswani in Bangkok says Sunday’s election is a chance for Thais to end years of political uncertainty.
The last few years have seen street protests, airport closures, and violent clashes between the supporters of the two main factions of Thai politics, our correspondent says.
The country’s image and economy have both suffered, its reputation for being a bastion of democracy in south-east Asia has been severely tarnished, she adds.
More than 40 parties are fielding 3,832 candidates for the 500-seat lower house of parliament, the House of Representatives.
In a two-tier system of voting, 375 legislators will be elected by constituency, while 125 candidates will be chosen from lists according to the proportion of votes each party receives nationwide on a separate ballot. There are some 47 million eligible voters.
Despite the wide variety of parties, only the Democrats and Pheu Thai are believed to have a realistic chance of capturing an outright majority. Opinion polls point to a win by Pheu Thai.
Yingluck Shinawatra was one of the first to vote at a school in Bangkok. She smiled and showed her ID card to television cameras before casting her ballot.
Our correspondent says Ms Yingluck is a political novice, and her popularity seems to rest on the fact she is campaigning on the policies of her brother, who many believe is Pheu Thai’s real leader.
He is living in self-imposed exile in Dubai to avoid corruption conviction, and has made it clear that he is keen to return to his homeland.
How the voting system works in Thailand, and why this election is so important
At a rally in Bangkok late on Friday Ms Yingluck said: “Please give a chance to this woman to serve the country. Please give a chance to this woman to bring reconciliation back to this country.”
She urged a “free and fair election” and said she was confident of winning an outright majority.
Mr Abhisit has said a vote for Pheu Thai is a vote for Mr Thaksin, and pointed out the party’s own slogan was “Thaksin thinks, Pheu Thai does”.
At his final campaign rally, he said the country must “get rid of the poison of Thaksin”.
“As long as Thaksin thinks, Pheu Thai has to do it – to find ways to give Thaksin back his seized 46bn baht ($1.5bn),” he added.
If Pheu Thai wins, analysts say all eyes will once again be on the military, which has regularly intervened in the political process. Army chief Gen Prayuth Chan-ocha on Thursday stressed that he would stay neutral.
Our correspondent says there is a lot at stake.
Whoever wins will have to bring a divided nation back together again, and try to heal Thailand’s wounded democracy, she adds.
Report by : BBC