Carlsen -- who has held the title since 2014 -- opened with a dramatic Trompowski attack, which involves sacrificing a bishop for an opponent's knight -- as the first of 12 games got underway in New York.
The match is billed as the youngest ever in terms of the players' cumulative ages: Carlsen is 25 and Karyakin is 26. It is also the first between players who came of age in the computer era, representing a generational shift in the game. In another first, the world championship will be broadcast from its trendy Manhattan venue using virtual reality, organisers said.
The two players will split the $1.1-million prize, with the winner getting three-fifths of the purse and the loser getting the rest.
The two players know each other well: they occasionally chat on Skype, although they kept contact to a minimum in the run-up to the game.
Carlsen is the bookmakers' favourite but Karyakin -- who practices at least six hours a day -- is seen as having every chance of causing an upset.
The tournament has prompted comparisons with the iconic 1972 showdown between American Bobby Fischer and the Soviet Union's Boris Spassky, two rivals in the Cold War-era whose showdown was dubbed the "Match of the Century."
This match comes as Moscow and Washington's relations have plunged to their lowest point since the Cold War due to disagreements on Syria and Ukraine.
The Russian president of the World Chess Federation (FIDE) Kirsan Ilyumzhinov is unable to attend the championship after being denied a visa, possibly because he has been on a US Treasury blacklist since 2015 over financial ties to the Syrian government.
"This is the first time in history of the world championships when the (FIDE) president is not at the match," Ilyumzhinov told journalists in Moscow on Thursday.
Carlsen has been called the "Mozart of Chess," and has inspired wide interest in chess in Norway since first winning the title in 2013. He has picked up endorsements and deals that earn him some $2 million a year.
He has a huge fan following, has done modelling and launched his own app called Play Magnus.
Karyakin, currently ranked 9th in the world, was born on Ukraine's Black Sea peninsula of Crimea, annexed by Moscow in 2014. He struggled with finding sponsors before moving to Russia in 2009 and becoming a citizen.
While he became the youngest grandmaster in history at just 12 years old, Karyakin admitted it would be hard to beat Carlsen, who is known for his relentless attacks and staying confident under pressure.
At a news conference in New York on Thursday, Karyakin said he had come to bring the crown back to Russia, calling this "the dream of my life," Russian news agencies reported.
"We are here to put up a fight," he said.