Polling began at all 243 centres at 7.00 a.m. amid tight security and will continue till 5.00 p.m, officials said.
Over 1.90 lakh voters are eligible to cast their ballots.
For the first time, printers have been attached to electronic voting machines (EVM) where voters can see their vote in a printed slip for seven seconds after pressing the button.
The Election Commission (EC) has deployed 1,720 personnel for the smooth conduct of the poll process. Over 3,000 policemen have also been deployed as part of the security arrangements.
The by-election was necessitated due to the death of of sitting legislator of main opposition Congress party Ramreddy Venkat Reddy. The party has fielded his widow Sucharitha Reddy.
State minister for roads and buildings T. Nageswara Rao is the candidate of ruling Telangana Rashtra Samithi (TRS), which is looking to continue its series of poll victories.
Though a total of 13 candidates are in the fray, it is mainly a three-cornered contest.
P.Sudershan of the Communist Party of India-Marxist (CPI-M) is the third key candidate.
Congress is being backed by Telugu Desam Party (TDP) and YSR Congress Parry, who have not fielded their candidates.
In the run-up to the bypolls, the Election Commission (EC) had transferred Khammam district collector Lokesh Kumar, district superintendent of police Shahnawaz Qasim and assistant returning officer Ganesh after the Congress complained against them.
The counting of votes will be on May 19.
In 2014 elections, 91.46 polling was recorded.
Venkat Reddy had won the seat by defeating his nearest rival Swarna Kumari of the TDP by 21,863 votes.