The Swiss are voting in a referendum on whether to curb net immigration to no more than 0.2% of the population, in a vote heavily criticised by the main political parties.
If passed the measure would require the government to cut annual immigration from 80,000 to 16,000.
Supporters argue that this would reduce pressure on the country's resources.
Opponents say that the measure would be bad for the economy. Early projections suggest the measure has not passed.
The country voted in February to re-introduce immigration quotas, effectively opting out of a EU free movement agreement.
The government still has to implement that referendum result, which threw relations with the EU into turmoil.
Two other referendums are also being held on Sunday: one on forcing the central bank to boost its gold reserves and one on scrapping a tax perk for expatriates.
Under the country's system of direct democracy, citizens can force a referendum if they muster enough signatures of support.
'Too crowded here'
The BBC's Imogen Foulkes in Geneva says that while unemployment is low and living standards are high, many Swiss worry about overcrowding and environmental degradation.
Switzerland's population has grown by over a million in 20 years, and is currently 8.2 million. Some 23% of its inhabitants are foreign nationals, most of them from EU states.
Opinion polls suggest the vote will be close, with latest indications suggesting that the measure will not be voted through.
Last year, net immigration stood at 81,000, according to public broadcaster Swiss Info.
The so-called Ecopop measure is named after Switzerland's 40-year-old Ecopop movement, which seeks to link environmental protection with controlling population growth.
Supporters say restricting immigration will safeguard Switzerland's environment by reducing the need for new transport links and new housing.
Ecopop also aims to limit overpopulation abroad, by devoting 10% of Switzerland's overseas aid to family planning in developing countries.
"It's already getting too crowded here," Anita Messere of the Ecopop committee was quoted as saying by the AFP news agency, adding that the country was being covered in concrete at a rate of more than one metre (yard) a second.
Opponents, among them all the major political parties, say the proposals will be bad for the economy because business leaders want to be able to recruit skilled labour from across Europe.
They also fear that if passed, the measure could put the country in breach of its international commitments and damage its image.
Christian Luescher, a parliamentarian for the Liberal Party and co-chairman of the committee opposing Ecopop, described the initiative as "absolutely absurd".
"It aims to drastically, linearly and arbitrarily reduce immigration to Switzerland, with absolutely no consideration for the needs of the economy," he told AFP.
Many environmental groups argue that if the Swiss really want to protect their environment, they should start by adjusting their own lifestyles, the BBC's Imogen Foulkes says.
Immigration in Switzerland
- Switzerland's population is about 8.18 million - of whom 1.96 million are not Swiss nationals, according to the Swiss Federal Statistical Office (FSO)
- EU citizens make up the vast majority of immigrants in Switzerland
- The largest group of foreign nationals living in Switzerland is from Italy; immigration from Italy started more than a century ago, but difficulties getting Swiss nationality meant many families remained Italian
- The second largest group comes from Germany, and the third largest comes from the former Yugoslavia