Voting is to take place at more than 1000 polling stations in 16 voting districts in the West Bank and Gaza.
The PLC, which is the legislature of the Palestinian Authority, governs together with a directly elected president, currently Mahmoud Abbas.
The PLC is to sit for four years. The last parliament was elected in 1996 and there was to have been another election in May 1999. But the Palestinian Authorities delayed the polls due to what it said were security concerns and the Israeli occupation.
The elections were last to have been held in July 2005, before being postponed again, this time to 25 January.
Voting is to begin on Wednesday at 7am (0500 GMT) and end at 7pm or 9pm at the latest if an extension is deemed necessary. Preliminary results are expected on Wednesday evening.
Violence continues to plague the occupied Palestinian territories, but Fatah and Hamas have agreed on a weapons ban near polling stations.
Palestinian security personnel have already voted, so that they can be on duty on polling day.
Palestinians resident in East Jerusalem, the West Bank and the Gaza Strip may vote, but not Palestinians with Israeli citizenship nor Palestinian refugees in other countries, which number about one and four million respectively.
There are about 100,000 Palestinians eligible to vote in occupied East Jerusalem.
After initially threatening to block voting there, Israel - under international pressure - has agreed to allow voting by post but has banned Hamas from campaigning.
By law, women must be included
in each party's list
The elections will be run and monitored by the Palestinian Central Elections Commission (CEC), which consists of nine Palestinian judges, lawyers and academics.
Election officials say 343 foreign and 17,268 local observers will be present.
Under new laws passed in June 2005, half of the 132 seats in the PLC will be distributed by proportional representation, while the other half will be contested by individual candidates in a first-past-the-post system.
That means 66 members of parliament will be chosen from 11 party lists that voters can choose wherever they are.
The other 66 seats will be decided by direct voting in the 16 districts.
By law, women must be included in each party's list, including being among the first three names on any party list.
Six of the 66 seats in the first-past-the-post system have been reserved for Christian candidates.
There are 11 parties competing in the polls, the five main ones being:
- Fatah - ruling party of Palestinian President Mahmoud Abbas
- Reform and Change - name under which Islamic resistance group Hamas is running
- Third Way - headed by outgoing Palestinian Finance Minister Salam Fayyad
- Popular Front for the Liberation of Palestine - PLO faction headed by Ahmed Saadat, jailed for ordering the assassination of an Israeli cabinet minister in 2001
- Independent Palestine - headed by human rights campaigner Mustafa al-Barghuthi.
The two biggest groups are Fatah and Hamas.
Fatah, dominant for many decades, held 68 seats (47 official, 21 independents affiliated to the party) out of the 88 in the previous PLC.
However, allegations of corruption and cronyism, along with internal divisions between the old and new guard, have cost it dearly in opinion polls.
Secular members occupied 12 seats, Islamists seven and the Palestinian Democratic Union had one seat in the previous parliament.
Hamas, building on several recent victories in municipal polls, is contesting parliamentary elections for the first time.
It promises clean government, social services and continued armed resistance against the Israeli occupation.
Hamas is fielding 62 candidates,
more than any other party
The manifesto of the Change and Reform List, under which Hamas is campaigning, makes no mention of Israel's destruction - an aim which Hamas states in its constitution.
The Change and Reform List of Hamas is fielding 62 candidates - more than any other party. Fatah's list consists of 45 candidates.
The latest opinion poll by the Jerusalem Media and Communications Centre indicates that Hamas will receive 30.2% and Fatah 32.3% of the votes.
Minority parties include the Third Way, with a 25-candidate list.
Besides internal consequences, the elections are expected to have have far-reaching external repercussions.
Israel has said that it will not negotiate with a Palestinian government filled with Hamas members. The United States considers Hamas a terrorist organisation.
How all that will affect the polls, as well as the peace process between the Israelis and Palestinians, remains to be seen.