A total of 4,478,386 Croatians are entitled to vote. Of them, about 405,000 live abroad and started casting their ballots on Saturday.
Many of Croatia's expatriate voters are said to traditionally be HDZ supporters.
The two parties share similar agendas, notably concerning Croatia's EU and Nato membership, and analysts agree that the former Yugoslav republic will have similar foreign and internal policies, irrespective of who wins.
"There is no difference" in foreign policy, said Davor Gjenero, a political analyst.
"There is a quite strong vision about common national politics and, regardless which one party forms the government after elections, there will be no important changes in the general direction of developing Croatia."
Croatia hopes to become the EU's 28th member by the end of the decade and wants to be invited to join Nato next year.
It will become a non-permanent member of the UN on January 1.
The economic programmes of the HDZ and the SDP differ slightly, with the HDZ favouring liberal policies while the SDP has signalled it favours greater state intervention.
Under the leadership of Ivo Sanader, Croatia's current prime minister, the HDZ has managed to shake off its earlier nationalist legacy and transform itself into a pro-European force.
It was returned to power in November 2003 after three years in opposition.
Sanader says his government has achieved economic growth, created more jobs and developed education and infrastructure.
He says he will do more and pledges "zero tolerance" for corruption.
But, the Social Democrats, led by Zoran Milanovic, a lawyer by education who has appealed to younger voters with his straight-talking tactics such as admitting he tried marijuana, accuses the HDZ of corruption and economic mismanagement.
The SDP has said it will tackle corruption as well as stamping out unemployment, which currently stands at 14 per cent, and raising salaries, now averaging 4,900 kuna ($980) a month.
"I don't know if they [the SDP] can do it better, but I am ready to give them a try," said Sanja Zlatar, a veterinarian.