Election officials said only 36.1 percent of Germans had voted by 2 pm, down from to 41.9 percent at the same time in 2005. That year saw a record post-war low for turnout of 77.7 percent.
While Chancellor Angela Merkel is a virtual shoo-in for another four years as leader, the last opinion polls before the election showed her hopes of forming the coalition she wants are hanging by a thread.
Merkel hopes to ditch the current "grand coalition" government between her conservatives and the centre-left Social Democrats, in favour of an alliance with the pro-business Free Democrats.
But her lead has shrunk in recent weeks and a poll by the Forsa institute published two days before the vote showed her preferred coalition on 47 percent - not necessarily enough to clinch a clear majority under Germany's complex electoral arithmetic.
And with pre-election opinion polls historically imprecise and other surveys showing that around one quarter of Germans were still undecided as they head to the ballot box, all parties campaigned hard until the last moment.
"I am always optimistic," Merkel told Bild am Sonntag newspaper.
Her Social Democratic challenger, Foreign Minister Frank-Walter Steinmeier, was also upbeat as he cast his ballot.
"I am very confident we will have a strong SPD. A strong SPD that will be able to lead the government from the top this time," said a beaming Steinmeier in Berlin.
Whichever coalition emerges victorious from Sunday's vote faces a bulging in-tray of challenges, with the country poised for its biggest slump in output in 60 years and at odds over an increasingly bloody mission in Afghanistan.
Security was tight throughout the country on election day in the wake of a series of threatening messages from Islamic militants, including one from al Qaida chief Osama bin Laden.
Overall, 62.2 million people were eligible to vote for 29 parties vying for power. Preliminary exit poll results are expected around 6pm Germany time.
How the system works
In contrast to many countries, Germans do not elect their leaders directly, but instead vote for parties.
As no one party is currently strong enough to achieve a majority in the parliament on its own, they engage in often torturous coalition talks after the election to form a government. The leader is then chosen by the coalition that holds the majority in the Bundestag lower house of parliament.
Germany's electoral system itself is extremely complex and combines a classic first-past-the-post system with proportional representation. Each person casts two votes on a single ballot paper.
In the first vote, people elect their chosen candidate in their electoral district to the Bundestag and the winner takes up the district's seat. In the second vote, people choose their preferred party from some 29 parties participating in the election by a complex system of proportional representation.
The system works as follows. In each of Germany's 16 states, parties draw up lists of candidates. Parties are awarded a certain number of seats per state depending on the proportion of votes they receive.
When all the first and second votes have been counted, the number of direct candidates is subtracted from the number of seats won through the second vote and the remainder is awarded to politicians in the order they appear on the list.
So, if a party scores three "direct" seats through the first vote but is eligible for 10 seats through the second vote, the top seven names on the party's state list would be awarded Bundestag seats.
However, if a party obtains more direct seats through the first vote than its proportion of seats through the second vote would justify, it keeps these seats as so-called "overhang" seats. As a result, the Bundestag often has more than its legal minimum of 598 MPs.
This quirk of the system could be crucial this time around, as Merkel's preferred centre-right bloc is expected to score as many as 20 of these "overhang" seats, compared to around four for her SPD rivals.