Polls opened to voters at 1000 GMT with 8.2 million Chileans registered to vote.
The latest opinion polls gave socialist candidate Michelle Bachelet, 54, a paediatrician and single mother, a six point lead over her wealthy right-wing opponent Sebastian Pinera.
According to the Mori polling institute, Bachelet should beat Pinera, 54, a billionaire businessman and the country's richest man, by 53% to 47%.
Bachelet, who became Latin America's first female defence minister in 2002, has called for taking advantage of the country's revenues from copper exports to improve education and conditions for the less fortunate.
She has portrayed herself as an ordinary woman who understands the concerns of ordinary people.
MICHELLE BACHELET, 54
A medical doctor and former defense minister, tortured during the Pinochet dictatorship, hoping to become Chile’s first woman president.
Promises to maintain the sound economic policies that has helped turn Chile into the region's star economy, chopping poverty by more than half.
SEBASTIAN PINERA, 56
One of Chile's wealthiest men, worth an estimated $1.2 bn.
The head of a rightist alliance, Pinera says the left has lost its relevance in Chile.
The owner of 27% of Chilean airline LAN Chile, Pinera says his business experience would help create jobs as well as pledging to boost police ranks to fight crime.
"I am just a Chilean woman, no more and no less than millions of other Chileans," Bachelet has said. "I work, I take care of my home and I drop my daughter off at school. But I'm also a Chilean who feels a calling to fight for justice and to public service."
Bachelet hopes to extend the dominance of the centre-left Concertacion coalition of leftist and centrist parties that has governed Chile since the military rule of Augusto Pinochet ended in 1990.
In the first round, the socialist favourite won 46% of the vote against three other contenders, short of the 50% needed to avoid a runoff.
Pinera got 25.4% in the first round, but is trying to secure a breakthrough for conservatives by winning the support of those who had backed another right-wing candidate.
As a left-wing single mother raising three children from two different relationships, Bachelet seems an unlikely leader for a country with strongly conservative, Roman Catholic roots.
But her own and her family's suffering during the Pinochet era has won her sympathy from voters.
Bachelet's father was a close adviser to the elected socialist president Salvador Allende, who was toppled by former dictator Augusto Pinochet in September 1973. Tortured while in prison, Bachelet's father died six months later.
"I am just a Chilean woman, no more and no less than millions of other Chileans"
Michelle Bachelet, Socialist presidential candidate
Pinera's elder brother was a minister for Pinochet. But he has put himself in the anti-Pinochet wing of the Chilean right.
In addition to his LAN airline stake, Pinera owns a television station and runs several other businesses that made him a billionaire.
He hopes Chileans will see his enterprise as proof he can run Latin America's most market-minded economy.
His reputation for hard work, his aggressive campaigning style and his visible, nervous energy have earned him the nickname "the locomotive".