Around 61 million Iranians are eligible to cast ballots in the election, which was called after the death of ultraconservative president Ebrahim Raisi in a helicopter crash.
It will be held amid heightened regional tensions over the Gaza war, a dispute with the West over Iran's nuclear programme and popular discontent over the state of Iran's sanctions-hit economy.
The first round was marked by a voter turnout of only 40 percent -- the lowest in any presidential election since the 1979 Islamic Revolution.
Pezeshkian, a relative unknown before of the election, came out on top with 42 percent in first round on June 28, but he fell short of an outright victory.
The candidacy of Pezeshkian revived cautious hopes for Iran's reformist wing after years of conservative and ultraconservative dominance.
But in the runoff, he is up against Jalili, who secured 38 percent in the first round and has the backing of the other conservative and ultraconservative candidates.
Parliament speaker Mohammad Bagher Ghalibaf, who came in third in the first round with 13.8 percent, urged his supporters to back Jalili in the runoff, as did two ultraconservatives who dropped out of the race.
Former president Mohammad Khatami, along with other reformist figures, has rallied behind Pezeshkian, urging voters to head to the polls in large numbers to "avoid making the situation worse" in Iran.
In central Tehran, Javad Abdolkarimi, a 42-year-old cook, said he was unsure who would get his vote.
"I'm still undecided on who to vote for," he told AFP, expressing hopes that a new government would help stop soaring inflation and the decline of the Iranian rial against the US dollar.
- Debate -
Late Monday, the two rivals faced off in a two-hour televised debate where they discussed Iran's economic woes, international relations, the low voter turnout, and internet restrictions.
"People are unhappy with us," Pezeshkian said during the debate, blaming the weak participation rate on the failure to involve women, as well as religious and ethnic minorities, in politics.
Jalili voiced dismay over the low voter turnout.
"I didn't vote in the first round and won't do so in the second," said Fatemeh, a 75-year-old pensioner who gave only her first name.
"The two candidates have not come forward to solve people's problems, they have come for their own survival."
"They don't care about people whatsoever."
Opposition groups, especially in the diaspora, have called for a boycott, questioning the credibility of elections and arguing that the reformists and conservatives are two sides of the same coin.
During the debate, Pezeshkian reiterated calls for easing internet restrictions which have impeded access to popular social media platforms over the years.
Jalili, Iran's former nuclear negotiator, maintained an uncompromising anti-West stance, arguing that Tehran does not need the 2015 nuclear deal to make progress.
"Today, we must not postpone our affairs (waiting for a relaunch of) the nuclear deal," he said.
- Economic issues -
Jalili staunchly opposed the nuclear deal with the United States and other world powers, which imposed curbs on Iran's nuclear activity in return for sanctions relief.
The deal -- which Jalili said violated Iran's "red lines" by accepting inspections of nuclear sites -- fell apart in 2018 when the US unilaterally withdrew from it.
Pezeshkian, who called for "constructive relations" with the United States and European capitals, lambasted Jalili, saying he was offering "no alternatives" to the deal.
On the economy, Jalili said his government could achieve a gross domestic product growth of eight percent, up from 5.7 percent in the year to March.
Pezeshkian ridiculed the claim, saying his rival should be "executed" if he failed to deliver.
Aras, a 39-year-old mining project manager, said he has little hope in either of the two candidates.
"Given that the participation of people has been decreasing from several years ago, (the authorities) need to understand that there is a problem," he told AFP in Tehran.
"In my opinion, the era of both the conservatives and reformists has ended."
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