Contenders for the legislature's 65 seats, who are drawn from eight political parties, have formed two electoral blocs of four parties each.
The Union for the Presidential Majority supports the government of President Omar Ismael Guelleh, while Union for a Democratic Alternative (UAD), is opposed to it.
Pro-government parties took all the seats in the last elections held in 1997.
They have the advantage of controlling all the mechanisms of state and are much better funded.
The leader of this bloc is Prime Minister Dileita Mohamed Dileita, 44, who has been in his post since March 2001.
However, if the opposition wins a majority in the legislature, Guelleh will be forced into an awkward and unprecedented "cohabitation", or power-sharing arrangement.
Five of the parties fielding candidates only came into existence in September, when a 10-year-old law restricting the number of legal parties to four expired.
Djibouti had been a one-party state from independence in 1977 until 1992.
There has been much switching of sides in the runup to the elections.
Days before polling day, only half the former French colony's 181,383 voters had collected their registration cards, according to the interior ministry.
UAD leading light Ahmed Dini Ahmed, a former prime minister and erstwhile head of the Front for the Restoration of Unity and Democracy (FRUD), a pacified but now divided former rebel group, has found himself the target of personal attacks during the campaign.
His detractors have described him a killer who had no hesitation in sending hundreds of young men to die for FRUD or in laying anti-personnel mines.
The other wing of FRUD, which threw in its lot with the government in 1994, is headed by Ali Mohamed Daoud, who has described Dini, his former comrade in arms, as a "perpetual loser," and a "quitter who has achieved nothing despite 50 years in politics."
Dini served as prime minister for just six months after Djibouti gained independence from France. He loudly resigned his post to join the exiled opposition against then president Hassan Gouled Aptidon.
Gouled retired after 22 years at the helm in 1999 and was succeeded by Guelleh, who won 74 percent of that year's presidential election.
Dini, for his part, has not shied away from highlighting the government's failures: unpaid salaries, decrepit social services, a crumbling education system, rising unemployment and corruption, and so on.
On Friday, voters in each constituency will be asked to choose the list of MPs drawn up by one of the two blocs.
Djibouti, with a population of 632,000, has five constituencies. The largest is Djibouti city, which has 37 seats.
The country plays permanent host to some 2,800 French troops in France's largest overseas military base.
Recent months have seen the US military increase its own presence there as part of international efforts to combat terrorism in the region.
The nerve centre of the Combined Joint Task Force - Horn of Africa, is the USS Mount Whitney, a command ship boasting communications and intelligence facilities described by the US military as "second to none"
Some 900 US soldiers, many of them special forces, are now housed in a camp in Djibouti city, the capital.
Aside from the spinoffs from this military presence, Djibouti's only other economic resource of note is its large port, which is the main trans-shipment point for landlocked Ethiopia.