A positive outcome after successive failures in 2009 and 2010 is critical to ensuring the future of South Korea's launch programme and realising its ambition of full membership of the elite global space club.
The 140-tonne Korea Space Launch Vehicle (KSLV-I) blasted off at 4:00 pm (1230 IST) from the Naro Space Center on the south coast.
Space centre officials said it would take nine minutes for the rocket, with a first stage manufactured by Russia and a second stage built by South Korea, to reach its target altitude and deploy the payload satellite.
Success would mean a huge boost for South Korea -- a late entrant into the high-cost world of space technology and exploration and desperate to get its commercial launch programme up and running.
Despite a very successful satellite construction programme, it faces a long slog to catch up with the other Asian powers with proven launch capability - China, Japan and India.
Initially scheduled for October 26, Wednesday's launch had been twice postponed for technical reasons.
The delay meant that rival North Korea beat the South by launching a satellite into orbit on December 12.
The North's launch was condemned by the international community as a disguised ballistic missile test, resulting in UN sanctions that in turn triggered a threat by Pyongyang to carry out a nuclear test.
Wednesday's mission was the last under the South's current agreement with Russia, which agreed to provide the first stage for a maximum of three rockets.
"The pressure is on the South Koreans like never before," independent space analyst Morris Jones said before the launch.
"There are several converging factors - the two previous failures, North Korea's success and the fact that this is the last chance with this particular rocket model," Jones said.
Seoul's space ambitions were restricted for many years by its main military ally the United States, which feared that a robust missile or rocket programme would accelerate a regional arms race, especially with North Korea.
After joining the Missile Technology Control Regime in 2001, South Korea made Russia its go-to space partner, but the relationship has not been an easy one.
In 2009, the rocket achieved orbit but faulty release mechanisms on the second stage prevented proper deployment of the satellite.
The second effort in 2010 saw the rocket explode two minutes into its flight, with both Russia and South Korea pointing the finger of blame at each other.
"Another failure would prompt a lot of mud-slinging," said Jones.
Whatever the final outcome of Wednesday's launch, South Korea insists it is committed to developing a totally indigenous three-stage, liquid-fuelled rocket capable of carrying a 1.5-tonne payload into orbit by 2021.
The KSLV-I is carrying a small, 100 kilogram (220-pound) Science and Technology Satellite-2C (STSAT-2C) developed by the Korea Advanced Institute of Science and Technology.
The satellite, which has a one-year operational lifespan, will mainly collect data on space radiation.