The candidate is being chosen by a committee of mostly pro-Beijing electors, rather than a public vote, which pro-democracy campaigners have been fighting for.
Carrie Lam, deputy to the current leader, is China's choice for the role and is expected to win.
Pro-Beijing and pro-democracy groups held competing rallies outside the election venue.
Mrs Lam's main rival, former finance chief John Tsang, is the public's favourite, according to opinion polls.
The third candidate is retired judge Woo Kwok-hing.
Calls for fully free elections in the semi-autonomous region have failed, despite intense demonstrations, known as th
Pro-democracy activist Joshua Wong, who was among those protesting and was a lead figure in the umbrella movement, has called the current electoral process "a selection rather than an election".
On Facebook, an online protest was launched called No Election in Hong Kong Now, which showed a video montage of regular citizens going about their business as the election took place to highlight how they were not entitled to participate.
Hong Kong's 1,200-seat Election Committee will pick one of the three candidates to succeed current leader CY Leung, who steps down in July.
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