We present a wave-function based method to solve the time-dependent many-electron Schrödinger equation (TDSE) with special emphasis on strong-field ionization phenomena. The theory builds on the configuration-interaction (CI) approach supplemented by the generalized-active-space (GAS) concept from quantum chemistry. The latter allows for a controllable reduction in the number of configurations in the CI expansion by imposing restrictions on the active orbital space. The method is similar to the recently formulated time-dependent restricted-active-space (TD-RAS) CI method [D. Hochstuhl, and M. Bonitz, Phys. Rev. A 86, 053424 (2012)]. We present details of our implementation and address convergence properties with respect to the active spaces and the associated account of electron correlation in both ground state and excitation scenarios. We apply the TD-GASCI theory to strong-field ionization of polar diatomic molecules and illustrate how the method allows us to uncover a strong correlation-induced shift of the preferred direction of emission of photoelectrons.