The current leader Alasdair McDonnell is being challenged by Colum Eastwood, the MLA for Foyle.
Dr McDonnell, 66, the MP for South Belfast, has been leading the SDLP since 2011.
Mr Eastwood, at 32, is the party's youngest MLA.
Dr McDonnell told party delegates during his speech on Saturday afternoon that "generational change is making its way through this party".
But he added that he intends to stay on as leader until he has completed a programme of "reorganisation and renewal" within the party.
"I don't expect to stay forever or even for a moment longer than needed to get the immediate job done," he said.
"But we need proper succession planning at all levels in this party because it is absolutely integral to the project of continuous party renewal which we have already begun."
Dr McDonnell has claimed to have achieved a "major turnaround" for the SDLP in encouraging new candidates to stand for election and increasing female representation among councillors to 40%.
But his leadership style has been criticised by some senior members of the party, including former deputy leaders Seamus Mallon and Brid Rodgers and the Foyle MP Mark Durkan.
Mr Eastwood is pointing to the support he has from figures like them, and from Pat Hume, the wife of the former party leader John Hume.
The former mayor of Londonderry says the SDLP has had "a couple of very bad elections" under Dr McDonnell's leadership and that it is time for a change.
More than 300 delegates to the SDLP conference in Armagh are entitled to vote.
The ballot opened at 16:00 GMT on Friday and the result will be announced around 17:00 on Saturday.
The result of the SDLP leadership contest will be announced at the party's conference later.