Opinion polls ahead of the run-off election showed socialist Michelle Bachelet, an agnostic former defense minister, has a good chance of becoming the first woman to lead the socially conservative South American country.
Officials started tallying the ballots at 4 pm (1900 GMT) after polling stations closed, and first results were expected three hours later.
Ms Bachelet had garnered 46 percent in the first round of voting last month, 21 points ahead of conservative Sebastian Pinera.
Fortunate woman
"I feel like a very fortunate woman," Ms Bachelet, told national television on Sunday.
"I was the first woman in Chile's history to be minister of health, and the first woman minister of defence, and if I am elected, I would be Chile's first woman president. That means so much to so many women."
Ms Bachelet, 54, voted at a Santiago school, accompanied by her youngest child.
She said she would await early returns at home and head to a hotel in the capital, where "everything is ready for a big celebration."
The latest opinion polls showed 53 percent voter support for Ms Bachelet, who ran for the center-left Concertacion coalition that has governed Chile since the military dictatorship of Augusto Pinochet ended in 1990.
Pinera upbeat
Despite trailing Ms Bachelet by six points in the survey, Mr Pinera was upbeat as he cast his ballot in downtown Santiago.
"After so many years of Concertacion, a change would be very good for our country," he said.
But he also reiterated claims President Ricardo Lagos interfered in the electoral process by openly backing Ms Bachelet.
On Sunday afternoon Mr Pinera piloted his helicopter over Santiago, saying this helped him relax as he awaited the outcome of the election.
He said his wife had pressed him to give up on his initial plan to paraglide off a Santiago cliff.
Mr Pinera, 56, who owns a majority stake in the LAN airline, a television station and several other businesses, has led an aggressive campaign on a socially moderate but fiscally conservative platform.
The conservative candidate, whose wealth is estimated at 1.2 billion dollars, had sought to convince voters his entrepreneurial successes demonstrate he has what it takes to lead Latin America's star economy.
Copper prices
Ms Bachelet, for her part, has said she would take advantage of record copper prices to improve education and conditions for the less fortunate.
She has portrayed herself as an ordinary woman who understands the concerns of ordinary people.
"I work, I take care of my home and I drop my daughter off at school. But I'm also a Chilean who feels a calling to fight for justice and to public service."
As a leftist agnostic raising three children from two different fathers,
Ms Bachelet seems an unlikely leader for a country with strongly conservative, Roman Catholic roots.
But her suffering during the Pinochet era has won sympathy from many people in a country still scarred by the 17-year dictatorship.
Ms Bachelet's father, an air force general, was an adviser to socialist president Salvador Allende, who was toppled by General Augusto Pinochet in 1973.
Tortured while in prison, Ms Bachelet's father died six months later.
Voting is generally compulsory in Chile, where more than eight million people were required to cast their ballots Sunday.
But General Pinochet, 90, who holds voter ID number one, was not allowed to vote because he is awaiting trial over the deaths of dissidents during his 17-year dictatorship.
He has been released on bond from the house arrest that was ordered as he awaits trial in one case, but on Wednesday, the appeals court in Santiago also lifted the immunity he enjoyed as an ex-president, clearing the way for his trial in another case.