The election, the first free vote in Tunisia's history, will set a standard for other Arab countries where uprisings have triggered political change or governments have tried to rush reforms to stave off unrest.
Tunisia set the "Arab Spring" in motion 10 months ago, when mass protests over poverty, unemployment and government oppression forced President Zine al-Abidine Ben Ali to flee to Saudi Arabia.
Sunday's vote is for an assembly that will draft a new constitution to replace the one Ben Ali manipulated to entrench his power. It will also appoint an interim government and set elections for a new president and parliament.
Polls opened at 7 a.m. (0600 GMT) and close at 7 p.m.
The mother of Mohamed Bouazizi, the young man whose self-immolation last December triggered the Tunisian revolt, said the election was a victory for dignity and freedom.
"Now I am happy that my son's death has given the chance to get beyond fear and injustice," Manoubia Bouazizi told Reuters. "I'm an optimist, I wish success for my country."
The Islamist Ennahda party, banned under Ben Ali who is now in exile in Saudi Arabia, is expected to gain the biggest share of votes. But it will probably not win enough to give it a majority in the assembly and will seek to lead a coalition.
The North African country's elite fear the rise of Ennahda puts their secular values under threat.
Ennahda has been at pains to assuage the concerns of secularists and Western powers, fielding several women candidates including one who does not wear the hijab, or Muslim headscarf, and promising not to undermine women's freedoms.
Fundamentalist Islamists known as Salafists have attacked a cinema and a TV station in recent months over artistic material deemed blasphemous. Ennahda says they have nothing to do with them, but liberals do not believe them.
Observers says Ennahda's intentions are not clear. Its election campaign has scrupulously avoided offering policy details that mark it out as much different from its rivals.
At a final election rally on Friday, Suad Abdel-Rahim, the female candidate who does not wear a veil, said Ennahda would protect women's gains.
But illustrating the party's contradictions, many of the books on sale on the fringes of the rally were by Salafist writers who believe women should be segregated from men in public and that elections are un-Islamic.
An Ennahda victory would be the first such success in the Arab world since Hamas won a 2006 Palestinian vote. Islamists won a 1991 Algerian election the army annulled, provoking years of bloody conflict.
Ennahda's fortunes could have a bearing on Egyptian elections set for next month in which the Muslim Brotherhood, an ideological ally, also hopes to emerge strongest.
Libya hopes to hold elections next year after a protest movement that transformed into an armed rebellion with NATO backing managed to oust Muammar Gaddafi. Unresolved violent conflict continues in Syria and Yemen, and many other governments have begun reforms to avoid civil unrest.
With so much at stake, there are concerns that even the smallest doubt over the legitimacy of the Tunisian vote could bring supporters of rival parties onto the streets.
The government says 40,000 police and soldiers are being deployed to prevent any protests escalating into violence. Shopkeepers say people have been stockpiling milk and bottled water in case unrest disrupts supplies.