Serb participation in Kosovo's political life, including elections, is one of the key elements of an EU-brokered deal that seeks to settle the dispute over Kosovo and unlock EU funds.
But there were indications that hard-line Serbs in Kosovo's north were intimidating their compatriots and causing a low voter turnout.
A group of some 30 masked men barged into a polling station late afternoon smashing windows and tearing up voting material. AP Television video showed police sealing off the area. It also showed members of the Organization for Security and Cooperation in Europe, which is monitoring the vote in the north, leaving the polling station in their vehicles. The polling station has since been closed.
Serbia's prime minister, Ivica Dacic, urged Serbs to defy the threats and anti-election campaign and cast their ballots. He said participation in the election is in the interest of the Serb people in Kosovo.
"Let us once do something that is in our interest and not in the interest of our enemies," Dacic said. "The fate of Serbs in Kosovo should be in their own hands, and not (Kosovo Prime Minister Hashim) Thaci's or the extremists'."
About 1.8 million voters are entitled to vote in 39 municipalities and elect mayors and local councilors. Voter turnout across Kosovo was around 33 percent by early afternoon.
An AP reporter witnessed Serbs crowding outside polling stations in Mitrovica to discourage fellow Serbs from voting. Many brandished arm-bands with "No to Albanian elections" written across them in Serbian.
Some Serbs fear the vote validates the secession of Kosovo, which declared independence in 2008. Serbia rejects Kosovo's independence, as do many Kosovo Serbs.
"I can't vote in these elections. To me these are foreign elections," said Zeljko Vuckovic, a Serb resident of Mitrovica.
Posters describing participation in elections as treason have sprung up in Serb-majority areas.
Another Serb, Radomir Milic, was one of the few voters who responded to Serbia's call to elect their leaders in an internationally-backed process.
"I vote for a better life because if we do not vote we cannot survive here," Milic said.
In the Serbian enclave of Gracanica where Serbs live surrounded by ethnic Albanians, voters waited in long lines to cast their ballots.
It is the first time that voters in all of Kosovo will choose local councilors and mayors since the country seceded from Serbia. The U.S. and the majority of the 28-nation EU have recognized the new state.
For the ethnic Albanian majority the vote tests the popularity of Thaci's governing party before next year's national elections. High-profile members of Thaci's Democratic Party of Kosovo have been targets of criminal investigations by the EU's justice mission in Kosovo.
"These are the first free elections that are organized in the entire territory of Kosovo," Thaci said after voting in a primary school in the center of the capital, Pristina. "All citizens of Kosovo are participating. They are crucial for our future in Europe."