The motion is unlikely to succeed as a majority of lawmakers plan to vote against it or abstain, but it is once again shining the spotlight on the ruling Popular Party (PP), whose reputation has been damaged by graft case after graft case.
"You have more (party) members under investigation than lawmakers in the lower and upper houses," Irene Montero, a 29-year-old Podemos lawmaker, told parliament before enumerating cases hitting the PP.
"You want to normalise the plundering of public coffers, normalise spending cuts... you want to normalise the deterioration of our health system," she said.
Rajoy listened as she spoke for just over two hours, while PP government spokesman and culture minister Inigo Mendez de Vigo sat reading a book.
"Zzz...," tweeted the PP on its official account.
Rajoy then took the stand, thanking Montero for her "loving" words and accusing Podemos of putting on a highly-mediatised "performance."
"I won't deny that there have been corruption cases in the Popular Party like in other parties, some very serious," he said, adding however that graft was "the exception and not the rule" in Spain.
"This scourge won't stop because you submit votes of no confidence," he told Podemos.
"It will stop because we approved measures and laws."
PM Rajoy responds during the debate. Photo: AFP
This is only the third vote of no confidence to take place in Spain since the 1977 transition to democracy after the death of dictator Francisco Franco, and none have ever succeeded.
Corruption is a major issue in Spain, which last year scored its worst ranking in Transparency International's annual corruption perceptions index.
It has mainly hit the PP, with even Rajoy called to appear as a witness next month in a major graft trial involving members of his party.
But the Socialists and regional politicians have also had their share of scandals.
Such is public anger over the issue that many voters flocked to Podemos and Ciudadanos, two relatively new parties, in general elections last year.
Opinion polls regularly show that after sky-high unemployment, corruption is Spaniards' main concern.
Pablo Iglesias, the charismatic leader of anti-austerity Podemos, later took the stand and gave concrete examples of people in difficulty in Spain, which is only just emerging from a damaging economic crisis during which the PP implemented sweeping spending cuts.
He mentioned "a telemarketing phone operator who earns €700 ($790) a month", or "a police officer without bulletproof vests due to your spending cuts."
"You would love us to shut up but we're in parliament to tell you the truth," he said.
The vote, which could take place later Tuesday or Wednesday depending on the length of the debates, is unlikely to succeed.
Rajoy, who first came to power in 2011 with an absolute majority, is now at the head of a minority government following two inconclusive general elections in 2015 and 2016.
But his PP still has 137 lawmakers out of a total of 350.
They will all vote against the motion, as will the 32 MPs of centre-right party Ciudadanos.
The main opposition Socialists, who have 85 parliamentary seats, plan to abstain in the vote.
By Marianne Barriaux / AFP