The last election, in April, saw the ruling Socialist Workers' Party (PSOE) unable to form a coalition after winning the most seats - but not a majority - in parliament in Madrid.
Failure to reach agreement between the Socialists and United We Can, Spain's fourth largest party in parliament, following the last election in April was one of the main reasons for the calling of Sunday's vote, the fourth in as many years.
In April, the Socialists won 123 seats in the parliament's lower house, 53 seats short of a majority. Adding these to the results of the Popular Party (88) the total would still only be 150.
Having increased its vote share by around 50 per cent, Vox will now will leapfrog both Podemos and Ciudadanos to become the third-largest party in the Spanish parliament, after having only just entered it for the first time in April.
"More ungovernability or stability: Spaniards choose", wrote conservative newspaper ABC on its front page Sunday.
Voting stations opened at 9 a.m. (0800 GMT) and are set to close at 8 p.m. (1900 GMT), with results expected within hours.
Last month, Spain's Supreme Court sentenced to prison nine Catalan politicians and activists who led a 2017 drive for the region's independence.
During a TV election debate, PP leader Pablo Casado called for a "real government that will put order in Catalonia".
But Vox, headed by Santiago Abascal, appears to have capitalized on Spanish nationalist sentiment stirred up by the Catalan conflict.
Prime Minister Pedro Sanchez addressing supporters.
"Drastic solutions are needed", he said during his final campaign rally on Friday night in Madrid.
So-called independentist parties in Catalonia, which have a leftist bent despite their ambitions for sovereign statehood - scorned by the European Union, regardless of the Catalans' europhilia - have also performed poorly, and may not be well-disposed towards Sanchez in any case, given he had harsh words for them during the election campaign.
The crowd responded by chanting "Torra to the dungeon".
A far-right party is projected to score major gains with its call for a crackdown on independence movements in Catalonia.
This time Vox could double that number, polls suggest.
In recent days, Mr Sanchez has repeatedly raised the alarm about Vox's "aggressive ultra-rightwing" policies, warning the party would drag the country back to the dark days of Franco's dictatorship.
Spain has not had a stable government since 2015. However, this option is not being considered by any of the two parties.
But there is a risk Sunday's vote will only prolong the agony. The far-left United We Can, which had a chance to help the Socialists form a left-wing government over the summer but rejected the offer, lost some ground to get 35 seats. "But these changes will not make it easier to form a government, so the political situation is likely to remain hard after this weekend's vote", he added.