New left-wing and centrist movements are fighting to end the two-party system of the past four decades and drive out the ruling conservative Popular Party (PP).
Surging in popularity after the wave of anti-austerity protests that erupted in 2011, they vow to fight corruption and heal a country stricken by unemployment and spending cuts.
"This is the first time we have felt hopeful when coming out to vote," said Eva Quintas, 32, after casting her ballot in central Madrid for left-wing protest party Podemos and the local group it is backing, Ahora Madrid.
"These elections are important. I think there are going to be big changes," he said. "People feel let down by politicians of all parties."
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Podemos wants to drive the PP out of power and challenge the mainstream left as the force of opposition in the eurozone's fourth-biggest economy, as the Syriza party has done in Greece.
The economically liberal Ciudadanos party meanwhile is luring voters from right and left, promising more moderate, market-friendly reforms.
In the city hall elections, numerous grassroots groups opposed to the government's austerity measures are running with Podemos's backing.
Leading centre-left newspaper El Pais called it a choice between "the old and the new politics". Conservative daily ABC pointed out the high level of undecided voters -- some 30 per cent according to polls.
Polls opened across mainland Spain at 9:00 am (0700 GMT), and will close at 1800 GMT.