Lapid, whose centrist Yesh Atid party lagged behind Netanyahu’s right-wing Likud in all recent opinion polls, said that the Knesset vote would determine the future of Israel.
"I call on everyone to vote for the future of our children, for the future of our country," he told supporters at a polling center in northern Tel Aviv.
Netanyahu, who is under investigation for corruption, cast his ballot in the city of Jerusalem. He said the right to vote was the most important right.
Israeli President Isaac Herzog, whose role is largely ceremonial, also voted in Jerusalem. He praised Israel’s "flourishing democracy" and urged Israelis to respect their right to vote.
Nearly 6.8 people are eligible to vote in the 25th Knesset polls. Almost 16% voted three hours into the election, with polling places set to close at 8 p.m. (18:00 GMT).
Fears are that the turnout will be low and the result inconclusive, opening the prospect of lengthy coalition talks. Polls put Netanyahu’s Likud five seats ahead of Lapid’s Yesh Atid last week but it is still short of the 61-seat majority.