More than 180,000 voters were invited to answer the question: “Do you want New Caledonia to gain full sovereignty and become independent?”
Polling stations opened at 8am local time and will close 10 hours later with results expected later on Sunday.
If voters choose independence, a transition period will immediately open so the archipelago in the South Pacific can get ready for its future status.
Otherwise, New Caledonia will remain a French territory.
Two years ago, 56.4% of voters who participated in a similar referendum chose to keep ties with Paris instead of backing independence.
Both referendums are the final steps of a process that started 30 years ago after years of violence that pitched pro-independence Kanak activists against those willing to remain in France.
The archipelago now has 270,000 inhabitants, including both native Kanaks, who once suffered from strict segregation policies, and descendants of European colonisers.
New Caledonia became French in 1853 under Emperor Napoleon III — Napoleon’s nephew and heir — and was used for decades as a prison colony.
It became an overseas territory after the Second World War, with French citizenship granted to all Kanaks in 1957.
