The quadrennial poll is to elect a new 300-member National Assembly, but it takes on extra significance as the results are likely to affect the presidential election just eight months away.
It is the first time in 20 years the two big elections take place in the same year.
The National Assembly will be comprised of 246 directly contested seats and 56 proportional representation seats to be allocated to parties according to the total numbers of votes they receive. Each voter is asked to cast two ballots, one for a candidate and the other for a party.
Polls opened at 6 a.m. and will close 12 hours later.
Early results are expected to be available from about an hour after the voting closes, although full official tallies are not expected until early Thursday.
The competition is basically a two-way race between the ruling Saenuri Party and the main opposition Democratic United Party.
Though the race is close, pre-election surveys and other indications suggest the ruling party will not retain its parliamentary majority.
Voter turnout is likely to affect the outcome of the polls as a higher turnout would mean more young voters participated in the balloting. The liberal opposition party is more popular among younger voters, while older voters are more supportive of the conservative ruling party.
The results are unlikely to have immediate effects on major domestic and foreign policies of South Korea, as President Lee will be in office until his term ends early next year. However, the emergence of an opposition-controlled parliament would be sure to significantly weaken his power in his final year in office.
The elections also take place amid heightened security tensions as North Korea is expected to launch a long-range rocket in coming days. Accustomed as they are to decades of tension with the provocative regime, however, few South Koreans consider the planned rocket launch an election issue.
The opposition party was once forecast to win an easy victory, riding on Lee's unpopularity driven by perceptions the gap between rich and poor has widened under his pro-business policies and the benefits of growth in big businesses have not trickled down to the working class.
The DUP chipped away at its own lead, however, by fumbling the selection of its election candidates and then mishandling revelations that one of its candidates uttered disgustingly sexist and derogatory slurs in the past, which critics say prove he is unfit to be a national legislator.
The remarks, which candidate Kim Yong-min competing in a Seoul district uttered during an Internet radio talk show in 2004, were so inflammatory they overshadowed opposition allegations that state authorities undertook extensive spying on civilians critical of the Lee administration.
The opposition party apologized, but did not expel Kim or cancel his election nomination, apparently because he appeals to younger voters. Kim became popular as a co-host of an online talk show that is harshly critical of Lee and the ruling party.
As the race grew increasingly tight, opposition leaders sought to shift the election focus away from the slur scandal and back to a referendum on President Lee, saying a ruling party win would spell devastation to the livelihoods of ordinary people.
Wednesday's elections are also a crucial test for major presidential hopefuls, including ruling party leader Park Geun-hye and her potential opposition rival Moon Jae-in. Moon, a former chief of presidential staff under late former President Roh Moo-hyun, is vying for a seat in the port city of Busan.
Park has overseen efforts to rebuild the beleaguered ruling party and has been at the forefront of its election campaign. A good showing for the party would be a boon for her presidential chances, but poor results could raise calls within the party to hold her responsible.
Moon's election victory would also solidify his image as a competent presidential candidate.
The ruling party had been in shambles until Park took over in December due in large part to perceptions it is a party primarily for the rich and privileged. The party had been widely expected to lose badly in the general elections, but it has seen its approval ratings climb after a series of reform measures.
Analysts say the race is so close that it is extremely difficult to predict the outcome, though they agree that neither side is expected to win a majority of seats in the unicameral parliament, and that whichever party wins between 135-140 seats will likely be the No. 1 party.
Experts also say dozens of races in Seoul and surrounding areas are particularly tight.
Eligible voters in Wednesday's polls total about 40 million, 80 percent of South Korea's 50 million population. Voters will cast their ballots at a total of 13,470 polling stations across the country. (Yonhap News)
