Almost one and a half million Palestinians living in the West Bank, Gaza Strip and annexed East Jerusalem are entitled to vote, with Palestinian president Mahmoud Abbas earlier urging voters to turn out.
He also ordered security forces to prevent any disruptions, saying the vote is a "decisive step" towards statehood.
Around 13,000 Palestinian policemen and security personnel have been deployed to protect polling stations on Wednesday.
Hundreds of international observers are on hand to oversee the ballot.
AFP reported that Hamas members have also been spotted welcoming voters inside polling stations in the group's Gaza Strip stronghold.
In an election eve message to Palestinians, Mr Abbas said the vote will usher in a new era of political pluralism and democracy.
"This great day will be of historic significance, a decisive step on the road to freedom and independence," Mr Abbas, adding that voting is "a right of every citizen which should be exercised."
The main armed factions, including the military wing of Hamas and the Fatah-affiliated Al-Aqsa Martyrs Brigades, also called for Palestinians to get out and vote.
"We assert that we will not allow any element to confiscate your right to vote and elect your representatives," a joint statement from the two groups said.
Mr Abbas's Fatah faction is facing an unprecedented challenge to its long grip on power from the Islamist movement Hamas, with a new poll predicting it will lose its majority in the Ramallah-based legislature.
Israel and the United States have said they will not work with a government that includes Hamas members.
"We have been determined to stage these elections with all the Palestinian political parties and we will demonstrate the same determination to ensure that they will be a success, conducted in a free and honest way," Mr Abbas said.
Tensions remain
While foreign observers have been encouraged by the relative lack of violence ahead of the poll, the overnight killing of a Fatah campaign staffer in the West Bank city of Nablus underlined simmering tensions.
A spate of attacks on government buildings and the offices of the central elections commission in southern Gaza earlier this month had raised fears that the election, already postponed last July, could be further delayed.
The head of a team of EU observers meanwhile expressed "deep concern" to the Israeli authorities after a Palestinian teenager was shot dead by troops close to a Jewish settlement near Ramallah on Monday.
"The Israeli government assured the international community that it would reduce IDF (Israel Defence Forces) activity to avoid any possible incidents before the elections," Veronique de Keyser said.