Hungarian Prime Minister Viktor Orbán is deeply opposed to plans from Brussels to distribute asylum seekers across the bloc.
The referendum has its roots in the EU’s migrant and refugee crisis - which saw more than one million people arrive in Europe in 2015.
Hungary was considered one of the countries worst-hit by the influx.
In a bid to help, the EU proposed relocating 160,000 refugees from Hungary, Italy and Greece to elsewhere in the bloc.
Polls by Hungarian media show a majority of voters agree with the government in opposing EU imposed quotas. The government needs at least a 50 per cent turnout for the vote to be binding.
It is not certain that many will vote or how the EU will react if the government view prevails.
At a September summit in Slovakia, EU leaders acknowledged that after the UK referendum in June in favour of leaving the 28-strong EU, they have to allay concerns about migration, security, jobs and globalisation.
Hungary’s foreign and trade Minister, Péter Szijjártó, said he expects voters to support the government’s position of rejecting the EU’s planned mandatory resettlement of immigrants in Hungary.
In addition to its anti-immigrant messages, Hungary’s government has also been accused of deliberately mistreating refugees and migrants.
“People are very frightened about this migratory wave,” Szijjártó said on Friday.
“Last year 400,000 people marched through Hungary. All of them violating the border, some of them attacking the police, occupying public areas, railroad stations, blocking the railway lines. People simply don’t want it.”
But Hungarian Socialist MEP Tibor Szanyi has condemned the government’s “inhumane and anti-refugee” policies, saying, “I suggest to our electorate to cast an invalid vote. This will send a strong signal to Orbán.”