Angela Merkel’s Christian Democrats may take the largest number of seats in parliament, or Bundestag, according to latest polls.
But Angela Merkel’s coalition partners, the Free Democrats, may not gain the 5% vote share required to win any seats.
If so, Angela Merkel may have to consider a coalition with her main rival Peer Steinbrueck’s Social Democrats.
A coalition of Centre-Left, Left and Green parties is also a possibility.
Voting opened at 08:00 local time and is due to close at 16:00.
Elections in Germany are often followed by a period of several weeks of coalition talks before the final shape of the government emerges.
On Saturday, the main parties concluded their campaigns with large rallies.
In Berlin, Angela Merkel asked for votes to continue with her government’s policies into 2017.
“I ask the people in Germany to give me a strong mandate so that I can continue to serve Germany for another four years, for a stronger Germany, a country which is well respected in Europe, which defends its interests but is also a friend of a lot of countries.”
In Frankfurt, Peer Steinbrueck – who leads the opposition SDP, told his supporters to believe in the possibility of victory.
“The voters decide, not commentary beforehand,” he said.
“It’s not a game. Don’t believe it’s decided yet – it isn’t. I would ask for the voters’ decision to be respected, because it’s them, not political polls or certain observers, who decide an election.”
The Green Party – who may play some part in an eventual governing coalition – has criticized Angela Merkel’s government for raising taxes.
The Free Democrats (FDP), whose best-known member is Foreign Minister Guido Westerwelle, has seen its fortunes decline sharply since the last election in 2009, when it won nearly 15% of the vote.
Analysts say the party, traditionally more liberal than the CDU/CSU, has struggled to stand out from its more powerful coalition partner on economic policy.
If the FDP do badly, as expected, the CDU/CSU may find themselves looking to other small parties to form a broader, more fragile coalition.
The election is one of the most important in years because of Germany’s dominant role in the eurozone.
With the biggest population of any EU state, Germany enjoys a GDP that far outstrips the economies of its partners and is crucial to decisions on tackling the eurozone’s debt crisis.
K9_FjzFs51E hBydyf5L8IYThe US House Ethics Committee has voted to release its report on former Republican Representative…
ABC News has agreed to pay $15 million to President-elect Donald Trump to settle a…
South Korea’s parliament has voted to impeach President Yoon Suk Yeol over his failed attempt…
Israeli war planes have carried out more than 100 air strikes in Syria on December…
President-elect Donald Trump has threatened to impose 100% tariffs on the BRICS countries if they…
Syrian troops have withdrawn from the city of Aleppo following an offensive by rebels opposed…