Conservative Prime Minister Silvio Berlusconi is fighting to retain his position in the face of a vigourous campaigh from centre-left Romano Prodi, who was polling strongly ahead of the election.
It is the first time an Italian election has been held over two days.
Around 65 percent of eligible voters turned out to vote on Monday before polls closed at 10pm (0600 AEST).
Partial results are expected shortly after polls close at 3pm on Monday local time.
About 47 million Italians are eligible to vote over the two days, in the first parliamentary elections in which nearly three million Italians living overseas can vote in their home countries.
Prime Minister Berlusconi has led Italy’s longest serving government since World War II and has been in power since 2001.
Mr Berlusconi, a flamboyant politician, cast his ballot in Milan where he has his main residence and has offered to abolish local property taxes.
The self made billionaire was accompanied by his 95-year-old mother Rosa, who grasped his hand and kissed it as he posed for photographers.
Mr Prodi’s centre-left coalition appeared confident at the end of the first day, with one senior party official saying it had “very good indications.”
The former European Union Commission president was among the first Italians to cast his ballot in his home city of Bologna in northern Italy.
“I hope everything goes as steadily and as serenely as possible,” said Mr Prodi, after an election campaign that was anything but steady and serene.
Both leaders traded insults in the bitter campaign, with Mr Berlusconi’s centre-right bloc coming under fire for Italy’s dire economic performance, tax cuts and low employment figures.
Shaky future
On March 24, when opinion polls were suspended under electoral law, most surveys showed Mr Berlusconi only had a narrow lead against Mr Prodi.
Mr Berlusconi’s future is looking precarious as he has battled to fend off prosecution for alleged corruption and conflict of interest over his media empire.
He has faced a series of criminal charges including bribing judges and making illegal donations to political parties but has never been given a guilty verdict.
He has also battled a long string of scandals and negative press targeting his media company which has posted large revenues while other companies in the same sector have failed.
The campaign was marked by a clash of styles between the suave and voluble Mr Berlusconi, Italy's richest man, and the diffident Mr Prodi, who in a previous 18-month stint as prime minister a decade ago earned a reputation for fiscal rigour.
Voters are choosing 630 members in the lower house of parliament, the Chamber of Deputies, and 315 in the Senate, under a proportional representation system which was recently readopted after a law in December threw out the old system, which was mainly first-past-the-post.