Opinion polls showed four of the eight main candidates were battling for the lead as party members gathered in hundreds of meetings – or caucuses – across the Midwestern state to vote on Monday.
The likely winner is expected to be one of a quartet comprising John Kerry, a senator from Massachusetts, John Edwards, a senator from North Carolina, Howard Dean, a former Vermont governor, and Dick Gephardt, a congressional representative from Missouri.
A victory in Iowa will give a candidate an ideal start as voters in each state pick their candidate to challenge President George Bush for the White House in November.
The states will later send delegates to the Democratic national convention in July to vote for presidential and vice presidential nominees in accordance with their caucus and primary election results.
According to a Des Moines Register poll published on Sunday, Senator Kerry has been gaining momentum after some intense campaigning and leads the pack on 26% of surveyed caucus members.
The Massachusetts senator has
been leading in state polls
The decorated former Vietnam war hero is hoping to pick up votes from the state's numerous retired military personnel – especially as rival candidate General Wesley Clark has been saving his campaigning energies for the next key election: the New Hampshire primary on 27 January.
The Iowa results – the first in a seven-month marathon of state-by-state elections are not hugely significant by themselves, say political analysts. But it can give a contender some useful early momentum when taken together with the New Hampshire primary.
"It can help candidates," says Professor Stephen Hess of the Brookings Institution, a former presidential consultant and US representative to the UN General Assembly.
"Kerry may do well in New Hampshire if he does well in Iowa."
Kerry is followed in Sunday's poll by Edwards (23%), Dean (20%), who has been leading the pack nationally, and Gephardt (18%).
The Iowa caucus election is most crucial for Gephardt, a Midwestern Democrat grandee who has invested heavily in Iowa.
"It's a must-win for Gephardt," Hess told Aljazeera.net. "He's from neighbouring Missouri, he won in Iowa in 1998, and he has put all his chips in this state."
Gephardt's intense campaigning and emphasis on issues dear to Iowans – jobs and trade – means if he cannot win here, the former House majority leader would struggle elsewhere and may well drop out of the race.
On the other hand, says Hess, the pressure is off Edwards because he was not initially expected to do well. "At this stage, it's all about expectations."
Other candidates include the conservative Connecticut Senator Joe Lieberman, who has reserved his campaigning efforts for New Hampshire, leftwing Ohio Congressman Dennis Kucinich, and black civil rights activist Al Sharpton.