Mahdi Karroubi, a reformist and former parliamentary speaker, and Mohsen Rezai, a former commander of the powerful Revolutionary Guard, are also standing in Friday's election.
Al Jazeera's Alireza Ronaghi, reporting from Tehran, said that thousands of people had gathered for a speech by Ahmadinejad in the capital's Freedom Square.
"This is possibly the last muscle-flexing for Ahmadinejad and his supporters, while the reformists will have the same kind of gathering this afternoon," he said.
"This is the most unpredictable and most exciting presidential election in Iran in years because the main contenders in this race have gathered much support among Iranians.
"It is clearly visible that Mousavi has a little edge over Ahmadinejad in the capital city, but in other provinces it is a totally different story."
Iran's reformists are hoping that a high turnout on Friday will help them oust the conservative Ahmadinejad, who they accuse of increasing the country's international isolation and compounding its economic difficulties.
Mousavi's campaign appears to have motivated the youth in a country where one-third of the electorate is under 30-years-old and was therefore not born at the time of the Islamic Revolution in 1979.
"I believe it is a new beginning and I want to take part in it," Parastou Pazhoutan, a 26-year-old Mousavi supporter, said.
"A month ago, I would have said Ahmadinejad was a sure bet,'' Sharif Emam Jomeh, a political analyst, said.
"There was apathy especially with the youth. But now, until 3am, they are out in numbers and they care ... Below the surface, something was boiling."
Part of the appeal of Mousavi has been his wife, who has joined him on the campaign and made vocal calls for improved women's rights.
"We seek freedom of expression, press and thought that are the eternal wishes of Iranian people," she told a rally in Tehran on Tuesday.
But Ahmadinejad still has strong support of the religious establishment and many of the poor, both inside and outside of the capital.
"Our supporters are many and we don't have to gather in the streets like this," Hossein Ghorbani, a taxi driver in Tehran, said.
Sixty-five per cent of Iran's population, or about 46 million people, are eligible to vote
Turnout in the last election was around sixty per cent
Just over 13 per cent, or six million of those eligible to vote, will be first time voters
Three-quarters of the population are under the age of 30 and the voting age is set at 18
"I support Ahmadinejad because he is not stealing and is with the people. He cares about us."
Thousands of people have taken part in daily rallies in support of the incumbent in the northeastern city of Mashad, Iran's second largest city.
Akbar Hashemi Rafsanjani, a former Iranian president and a powerful figure in Iran's clerical leadership, on Tuesday urged the country's supreme leader to take action against Ahmadinejad over his remarks about the reformists.
He wrote to Ayatollah Ali Khamenei that millions of Iranians had witnessed "mis-statements and fabrications" in a televised election debate last week, when Ahmadinejad accused Rafsanjani of corruption.
"I am expecting you to resolve this position in order to extinguish the fire, whose smoke can be seen in the atmosphere, and to foil dangerous plots," he said in the letter published by the semi-official Mehr news agency.
Fourteen high-ranking clerics from the city of Qom, the supreme leader's base, echoed Rafsanjani's remarks, expressing "deep concern and
regret" that Iran's image had been harmed in the debate.
"Accusing those who were not present at that debate and could not defend themselves is against our religion," they said in a statement.
It was also reported on Tuesday that a pro-Mousavi newspaper had been closed down by the authorities.
"Despite the implementation of a decree issued on April 11 by ... Tehran's penal court that authorised the publication of Yas No, it was banned today by Tehran's prosecutor," Saleh Nikbakht, the newspaper's lawyer, was quoted as saying.