The poll, carried out as two "referendums" in provinces where the insurgents hold more than a dozen towns, marks a serious deepening of the political crisis in Ukraine.
Although a "yes" vote would likely only be recognised by Russia, it would greatly undermine a presidential election Ukraine is to hold in two weeks, which the United States and the European Union see as crucial to restoring stability.
The referendums are "illegal under Ukrainian law and are an attempt to create further division and disorder", US State Department spokeswoman Jen Psaki said in a statement late Saturday.
"If these referenda go forward, they will violate international law and the territorial integrity of Ukraine. The United States will not recognise the results of these illegal referenda," she stressed.
Earlier Saturday, France and Germany jointly threatened "consequences" on Russia if the election is scuppered -- echoing US President Barack Obama's warning of automatic sanctions that would slice into whole sectors of Russia's weakening economy.
Sunday's vote comes amid intensifying violence on the ground in east Ukraine.
Troops have been battling the well-armed rebels, who have barricaded themselves in towns and cities in the two provinces where the "referendums" are taking place: Donetsk and Lugansk.
Despite rebel claims that the polling will reach 90 percent of the seven million people living in these two provinces, the areas they hold account for less than half that population.
They decided to go ahead with the vote despite a public request made Wednesday by Russian President Vladimir Putin that they postpone it.
Polling stations will open in schools in rebel-held territory at 08:00am (0500 GMT) and close 12 hours later, according to insurgent chiefs in the city of Donetsk.
Kiev has already dismissed the vote as "illegitimate" and against the Ukrainian constitution.
However, like in Crimea -- which Russia annexed in March after a similar referendum -- it has been powerless to stop preparations.
- West threatens 'consequences' -
The Ukrainian government and its Western backers accuse Putin of deploying Russian special forces in east Ukraine, as in Crimea, to see the vote through and to sabotage the May 25 presidential election.
Putin belatedly admitted sending military forces to Crimea but continues to deny militarily meddling in east Ukraine.
Psaki said that "we still see no Russian military movement away from the border" despite Putin's claim that Russian forces were pulling back.
In their joint statement Saturday, French President Francois Hollande and German Chancellor Angela Merkel urged Ukraine's security forces to stop their offensive on rebel-held positions in order to give dialogue a chance.
That echoed a call by Putin, who set that as his condition for backing the presidential election.
But, the leaders of France and Germany warned, if the subsequent presidential election was stymied, "appropriate consequences should be drawn", indicating tougher sanctions in line with those brandished by the United States.
The two also called for a "visible" withdrawal of Russian troops from the Ukrainian border after NATO disputed Putin's claims he had pulled back his estimated 40,000 servicemen.
The rebel chief in the flashpoint town of Slavyansk, Vyacheslav Ponomaryov, said he expected 100 percent turnout for Sunday's vote.
After the results come in, "the Republic of Donetsk will begin to function" and cultivate "friendly relations" with Russia, he added.
But another rebel leader, Roman Lyagin from Donetsk, said: "If the answer is yes, it does not necessarily mean that we will be joining Russia".
A poll released Thursday by the Pew Research Center in the United States suggested 70 percent of Ukrainians in the east want to stay in a united country, while only 18 percent back secession.
The vote added fuel to a crisis that has turned increasingly deadly in the past two weeks.
On Friday, up to 21 people were killed in what Interior Minister Arsen Avakov said was a "full-scale military clash" in the southeastern port city of Mariupol. The violence occurred as Ukraine and Russia commemorated the Soviet victory over German forces in World War II -- during which Putin made a triumphant visit to annexed Crimea.
Mariupol on Sunday observed a day of mourning, and an AFP reporter said passions remained high.
Although the death toll there varied, according to different officials, it appeared to be the bloodiest day in the conflict since May 2, when clashes that resulted in a horrific inferno in the southern port city of Odessa claimed another 42 lives, most of them pro-Russian activists.