Libyans are voting in their first free election for more than 50 years.
They are selecting a temporary assembly which will have the task of picking a cabinet and a prime minister.
But the vote has been overshadowed by violence and deep regional divisions. An electoral worker died on the eve of the vote when gunmen attacked a helicopter near Benghazi.
Many people in eastern Libya are concerned that the oil-rich area will be under-represented in the assembly.
The region has been allotted only 60 seats in the 200-seat assembly.
Under the system devised by the outgoing National Transitional Council (NTC), which led the campaign against Gaddafi, 100 seats are allocated to the west and 40 to the south.
Polls opened at 08:00 (06:00 GMT), with reports of queues forming outside polling stations in the capital Tripoli.
"Words cannot capture my joy, this is a historic day," Fawziya Omran, 40, told AFP news agency.
"I've made my choice. I hope it is the right choice and that the candidate will not disappoint us."
However, the BBC's Rana Jawad in Tripoli says it is unclear whether polls are opening everywhere as planned.
Some in the east fear being marginalised as they were for decades under Col Muammar Gaddafi's 42-year rule, our correspondent says.
Some former rebels have been threatening to derail the vote by targeting the oil industry, large parts of which are located in the east.
They have shut down as many as five oil terminals, including those at Brega, Ras Lanouf and Sidra, and a significant part of Libya's oil exporting capacity has been disrupted.
Ballot papers were set alight at a key election office in Ajdabiya and another election centre was attacked in Benghazi.
In an attempt to defuse the situation, the NTC has said the new parliament will no longer be responsible for naming the panel that will draft Libya's new constitution.
The 60-member committee will be elected in a separate vote at a later date.
A Libyan army spokesman said the helicopter was transporting voting materials when it was attacked close to the airport in Benghazi. An election commission worker was fatally wounded, he said, but the helicopter managed to land safely.
An election commission member in Tripoli told the BBC that the identity of the gunmen was not yet known but that the attack would not affect the vote.
The poll has already been postponed once before.
Around 2.9 million people are eligible to vote for the 3,700 candidates standing for the new General National Congress, in Libya's first national vote since Col Gaddafi was toppled in October 2011 after an eight-month uprising.
There are countless political parties taking part in the election, our correspondent says, but the biggest to emerge so far is the Justice and Construction Party, made up mostly of Muslim Brotherhood members.