Frank Hsieh, of the ruling Democratic Progressive Party, faces a tough battle against Ma Ying-jeou of the Kuomintang.
Ma, whose party has traditionally taken a more conciliatory line towards
But analysts believe Hsieh may have narrowed the gap in the race to replace President Chen Shui-bian.
Hsieh has accused his rival of being soft on
Over 17 million people are eligible to vote and turnout is expected to be high. Polling stations opened at 0800 on Saturday (0000GMT), and close at 1600 (0800GMT), with results expected a few hours later.
'Resume dialogue'
The economy has been central to the election campaign.
Many Taiwanese think closer links with
Ma has proposed direct flights to the mainland and easing restrictions on doing business with
His rival has been more cautious, promising dialogue with
"In the past the DPP was criticized for not opening up but I will be more compromising, I will do better," Hsieh said as the campaign drew to a close.
Voting in the southern city of
Television reports showed Ma Ying-jeou taking his usual morning run. He is expected to vote in
'Second
The recent unrest in
Earlier this week Ma talked of a possible Olympic boycott if the situation there deteriorated, though he said on Friday he would not "push the issue to the extreme".
Hsieh warned that his rival could make
It has threatened to use force if the island moves towards formal independence.
Also on Saturday, voters are also being asked to cast a ballot in two competing referenda on whether
The more controversial version asks voters if the island should seek membership under the name
Many countries, including the
Frank Hsieh, presidential candidate of