Millions of Istanbul residents began voting on Sunday in a re-run of a mayoral election that has become a referendum on President Tayyip Erdogan's policies.

In the initial March 31 vote, the opposition Republican People's Party (CHP) candidate secured a narrow victory over Erdogan's AK Party (AKP) in Turkey's largest city, a rare electoral defeat for the president amid mounting economic woes.

But after weeks of AKP appeals, Turkey's High Election Board in May annulled the vote citing irregularities. 

Polling stations across Istanbul opened at 8 am, with 10.56 million people registered to vote in a city which makes up nearly a fifth of Turkey's 82 million population. 

Erdogan has repeated his line that "whoever wins Istanbul wins Turkey." A second loss in the city, where in the 1990s he served as mayor, would be embarrassing for Erdogan.

Turkey's economy is in recession and the US, its NATO ally, has threatened sanctions if Erdogan goes ahead with plans to install Russian missile defenses.

A second AKP loss could also shed further light into what CHP mayoral candidate Ekrem Imamoglu said was the misspending of billions of lira at the Istanbul municipality, which has a budget of around $4 billion.

"If Imamoglu wins again, there's going to be a chain of serious changes in Turkish politics," journalist and writer Murat Yetkin said.

"It will be interpreted as the beginning of a decline for AKP and for Erdogan as well," he said, noting that the president himself had called the local elections "a matter of survival."

Another Imamoglu win could eventually trigger a national election earlier than 2023 as scheduled, a cabinet reshuffle, and even a potential adjustment in foreign policy, Yetkin added.

To narrow the roughly 13,000-vote gap in March, the AKP re-calibrated its message recently to court Kurdish voters, who make up about 15 percent of voters in the city of 15 million.

The campaign received a twist when jailed Kurdish militant leader Abdullah Ocalan urged the pro-Kurdish Peoples' Democratic Party (HDP) to stay neutral in the vote. The HDP, which backs Imamoglu, accused Erdogan of trying to divide Kurds.

Polls have shown Imamoglu, a former district mayor, retaining a lead over his AKP rival, former prime minister Binali Yildirim. Some polls put him up to 9 percentage points ahead, with his more inclusive message resonating with some voters.