Polls opened at 08:00 and pit a main opposition grouping against President Viktor Yanukovych’s Party of Regions.
Viktor Yanukovych has been criticized in the West for the jailing of his main rival, former PM Yulia Tymoshenko.
A number of smaller parties are aiming to capitalize on disillusionment.
These include the liberal Udar party of boxing champion Vitali Klitschko – known as Dr. Ironfist – and the far-right Svoboda party.
Polls will be open for 12 hours and while some counts will come in very quickly, a final result is expected on Monday.
Half of the seats in the 450-member parliament will be filled by elected parties on a candidate list basis.
The other half will be filled by individual candidates voted in on a first-past-the-post system.
Some 5,000 candidates are standing for election.
These are some of the most closely watched elections in Ukraine’s history, with 3,500 accredited foreign observers, including more than 600 from the Organization for Security and Cooperation in Europe (OSCE).
Western officials have voiced concerns over campaigning.
In a New York Times editorial this week, US Secretary of State Hillary Clinton and EU foreign policy chief Catherine Ashton cited “worrying trends” in the interim election report from the OSCE (of which Ukraine is due to take over the rotating chair in January).
These included government resources being used to favor ruling party candidates, media restrictions, vote-buying and lack of transparency on the electoral commissions.
Critics claim Yulia Tymoshenko was prosecuted and imprisoned last year in order to prevent her running in the election.
She is serving a seven-year prison sentence after being charged with overstepping her powers as prime minister four years ago when she signed a gas deal with Russia.
The EU indefinitely postponed its association agreement, including a free trade pact, after the jailing.
Yulia Tymoshenko’s Fatherland party has joined with other opposition parties to form a united front.
Viktor Yanukovych – who has been president for three years and faces re-election in 2015 – has rejected calls to free his rival, maintaining that she was sentenced by an independent court.
He insists European integration is one of his government’s main goals and will hope his pro-business party can hold on to the parliamentary majority it enjoys.
Ukraine’s 46 million-strong population has been hit by the global economic downturn and unpopular pension and tax policies.
Viktor Yanukovych’s Party of Regions recently attempted to assuage public opinion by boosting public sector salaries and pensions – although this also exacerbated a $2 billion budget deficit and called into question the likelihood of securing IMF lending, correspondents say.
Ukrainian authorities hope a good assessment by 3,500 international election observers will reopen the door to the association agreement.
Vitali Klitschko’s popularity has grown because of his opposition to Viktor Yanukovych and because, as a newcomer, he is so far untainted by Ukraine’s corrosive politics which, correspondents say, are blighted by corruption and cronyism.
Svoboda’s strong anti-government stance and its passionate defence of Ukraine’s culture and language has also gained support, although the party is also known for racist and anti-Semitic statements.
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