The main opposition Renamo party, which has maintained an armed wing since the end of the country's civil war, is running in the municipal vote for the first time in 10 years.
Renamo fought a brutal 16-year civil war against the Marxist-inspired Frelimo government that left one million people dead before fighting ended in 1992.
In 2013, fresh violence erupted between Renamo rebels and government troops, raising fears of a return to civil war. But three years later, the party declared a truce and opened fresh peace talks.
Renamo is hoping for a breakthrough ahead of next year's general election. "These landmark local elections will test the success of decentralisation measures agreed with the armed opposition and will act as an important political bellwether," the London-based EXX risk consultancy said in a note.
"The rewards at hand have rendered the political climate in Mozambique both tense and volatile, as highlighted by a series of violent incidents in the pre-election period." The 13-day election campaign ended on Sunday after several clashes between rival party supporters.
Renamo supporters say they have faced intimidation and assaults during the campaign.
The vote will be held in Mozambique's 53 municipalities, 49 of which are currently governed by Frelimo.
Parliament approved new electoral laws in July that means that a simple or relative majority is sufficient for a candidate to win election.
Previously, an absolute majority of over 50 percent of votes was needed. The new laws could split the opposition vote.
As well as the internal political tensions, Mozambique has been rocked over the last year by the emergence of an Islamist insurgency in the northern province of Cabo Delgado, which has rich offshore gas deposits.
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