The vote is being relayed live on television
Meanwhile, aides of the disgraced former President, Abdurrahman Wahid, say he has finally agreed to leave the presidential palace and is planning to fly to the United States for medical treatment.
In his first interview since his dismissal, Mr Wahid said he had underestimated the strength of his opponents - and predicted a return to authoritarian rule.
VP first-round vote In the country's national assembly, leaders of the main political parties voted on five candidates for the job made vacant by former vice-president Megawati's elevation.
From the 700-seat assembly, 613 members voted (with four abstentions):
The first three go through to a second round of voting.
The process has sparked bitter exchanges between the rivals, threatening to undermine the coalition that made Megawati's appointment possible.
The BBC's Richard Galpin says the Islamic bloc in parliament had assumed its candidate would stand unopposed as part of a deal to balance the more nationalist forces represented by President Megawati, but others have now joined the race.
Many observers favour the former army general and top security minister Susilo Bambang Yudhayono, whose dismissal by Mr Wahid last month came as a shock.
But his military background has raised concerns of a rehabilitation of the armed forces, which are supposed to be removed from politics.
The third remaining candidate is just as controversial. Akbar Tanjung is leader of the Golkar party, used by former President Suharto to prop up his long period of authoritarian rule.
Megawati's Indonesian Democratic Party of Struggle has not put forward a candidate.
Protests
Hours before the vote was due to take place, about 2,000 students gathered outside the heavily-guarded parliament building protesting against the vice-presidency going to either Golkar or the military.
Demonstrators waving flags shouted: "Fight the return of the New Order, fight the return of Golkar, down with the military."
Earlier, President Megawati visited the grave of her father - Indonesia's founding leader, Sukarno - in Mr Wahid's political stronghold of Blitar, East Java.
The ousted president, meanwhile, will leave the presidential palace on Thursday, his former justice minister Emha Ainun Najib said.
Mr Wahid has remained in the complex since refusing to accept his dismissal on Monday by the national assembly for alleged corruption and incompetence.
Wahid face-saver
Plans for the 61-year-old former leader, who is blind and has had several strokes, to fly to the US for treatment would be a face-saving way of ending the stand-off which threatened to become an embarrassment for Mr Wahid's supporters and the country's new leadership.
In his first interview since his removal from office, Mr Wahid said he had underestimated his opponents' resolve.
He said he expected Indonesia to return to military-backed authoritarian rule and criticised the generals who had shifted their support to Megawati over the past year.
"They used the quarrel between the politicians to set up their own rule, which I think will slide little by little to the old ways.
"People will react to the return of censorship, to the return of many, many restrictions in their lives," he added.
Mr Wahid said he did not recognise parliament's decision to sack him, saying: "The ouster is illegal and I will have nothing to do with it."