The two candidates in Saturday's running are both opposed to independence from China, which considers self-ruled Taiwan its own.
They have both vowed to follow the path of incumbent chairman Lien Chan, who ended decades of hostility with a historic trip to Beijing in April.
Analysts say the outcome is hard to predict because even though opinion polls show Hong Kong-born Taipei Mayor Ma Ying-jeou in the lead, local-born parliament speaker Wang Jin-pyng could still swing the vote if he can mobilise traditional grassroots support.
The two-way race is unprecedented for the 110-year-old Nationalist Party, or Kuomintang (KMT), that was founded by Chinese revolutionary Sun Yat-sen.
Chinese civil war
The KMT once ruled all of China and fled to Taiwan after losing the Chinese civil war in 1949. The party enjoyed uninterrupted rule of the island until 2000, when they lost to the pro-independence Democratic Progressive Party.
Ma has been criticised as being an
Former president Lee is the KMT's estranged leader, who quit the party to form the Taiwan Solidarity Union, a staunchly pro-independence party that is an ally of the DPP.
KMT leaders are traditionally the party's standard bearers for presidential elections. Lien ran for office in 2000 and 2004, losing both times to Chen Shui-bian of the DPP. He has since decided to stand down from the party leadership.
The KMT only introduced direct chairmanship elections after losing its grip on the presidency in 2000.
Saturday will be the first time the KMT's one million rank-and-file members have faced a choice. The result is expected after 8pm (1200 GMT).
Ma, 55, enjoys high popularity in the northern capital of Taipei.
Dubbed Little Brother Ma by his supporters, many see the mayor as the opposition's best, and perhaps only, hope of wresting power back from the DPP.
But critics say Ma is an inefficient leader and lacks backing in rural areas, especially in the island's south, where support for an independent Taiwan identity runs high.
Ma is also relatively junior in a party filled with elders such as Wang, who is 64.
Wang has a strong following in
Ma, whose mother tongue is Mandarin, speaks fluent English. He speaks the local Taiwanese dialect with a heavy accent.
Wang, on the other hand, enjoys a strong following in the south and carries significant political clout as head of parliament, the Legislative Yuan.
"The KMT has been labelled as a mainlanders' party. We need to shake off that image in order to win back power," said party worker Ko Chung-wei, who voted for Wang.
China tried to quell uproar on Saturday over a general's comment that Beijing might attack the United States with nuclear weapons in a conflict over Taiwan, saying the statement was his personal opinion.
But the Chinese government affirmed its insistence that it would not permit the self-ruled island to pursue formal independence - a step that Beijing says it would go to war to stop.
The US State Department on Friday criticised the remark by Major-General Zhu Chenghu, a dean at China's National Defence University, as "highly irresponsible" and asked for Chinese assurance that it did not reflect official thinking.
Zhu told visiting Hong Kong-based reporters recently that China would respond with nuclear weapons if the US drew their missiles and position-guided ammunition into the target zone on China's territory.
The official Xinhua News Agency said Zhu's comments were personal views, citing a statement from the Foreign Ministry issued late on Friday.