The meeting was cloaked in secrecy, an attempt by both sides to prevent leaks to the media and maintain trust. Officials would say only that the talks took place in Jerusalem, and there was no immediate comment from either side. The Israeli government released a brief video showing the chief negotiators shaking hands as the talks continued into the evening.
Ahead of the meeting, there already were signs of trouble. A new Israeli push to build hundreds of new homes in Jewish settlements and fresh fighting in the Hamas-ruled Gaza Strip underscored the tough road ahead.
"We are committed to making the effort, for the sake of Israel and for Israel's values," Israel's chief negotiator, Tzipi Livni, told Channel 10 TV before the talks began. "It will be complicated and complex, but I am not giving up."
Late Wednesday, both sides confirmed the meeting had ended after several hours. A Palestinian official said they had agreed to meet weekly, alternating between Jerusalem and the West Bank town of Jericho. The official spoke on condition of anonymity because of the sides' commitment to maintain secrecy. No further details were immediately available.
The negotiations came after months of mediation by U.S. Secretary of State John Kerry, who has made six trips to the region since taking office early this year.
It was the third attempt since 2000 to agree on the terms of establishing a Palestinian state alongside Israel.
Negotiations broke down in late 2008 and have remained stalled, in large part because of Israeli settlement construction on occupied land claimed by the Palestinians for a future state. The Palestinians seek to establish an independent state in the West Bank, east Jerusalem and the Gaza Strip, territories captured by Israel in 1967.
They see Israel's continued construction of settlements, now home to more than 500,000 Israelis, as undermining hopes of dividing the land between two states, a view that is overwhelmingly shared by the international community.
The Palestinians had demanded a halt in settlement construction and an Israeli pledge to accept its pre-1967 lines as the basis for a final border. Those lines had been a reference point in past talks.
Israeli Prime Minister Benjamin Netanyahu refused to make any commitments, saying all disputes should be resolved through negotiations.
The Palestinians have voiced great skepticism about dealing with Netanyahu, who takes tougher positions than his predecessor, Ehud Olmert.
While unable to secure a halt in settlement construction, Kerry has promised the Palestinians that Israel will show restraint. The Palestinians also say that Kerry has assured them that the 1967 borders will be the basis of discussions, even if Israel refuses to say so publicly.
To entice the Palestinians back to the table, Israel released 26 prisoners hours before the talks began, including many who had been convicted in deadly attacks on Israelis. They were the first of a total 104 long-serving prisoners that Israel is expected to release as negotiations progress over the next nine months.
Kerry's envoy, former U.S. Ambassador Martin Indyk, was in the region to mediate.
Officials say that Palestinian President Mahmoud Abbas agreed to return to negotiations to avoid being blamed for failure. But expectations remain low.
Israel's announcements in recent days of plans to build more than 3,000 settler homes in the West Bank and east Jerusalem have only fueled the Palestinian mistrust.
"The talks might collapse any time because of the Israeli practices," Yasser Abed Rabbo, an adviser to Abbas, told Voice of Palestine radio.
Wednesday's meeting came after a preliminary gathering in Washington two weeks ago.
Abed Rabbo said the talks were to tackle borders and security arrangements first. Previous negotiations, in 2000 and in 2007-2008, broke down before the sides got to the explosive issues of dividing Jerusalem and resettling millions of Palestinian refugees and their descendants
The civil war in neighboring Syria to Israel's north, strife in Egypt to the south and Hamas' control of Gaza have all heightened Netanyahu's concerns about his country's security.
Israeli hard-liners fear the West Bank, where Abbas leads a limited self-rule government, could follow the path of Gaza if Israel withdraws from the area.
Israel unilaterally pulled out of Gaza in 2005, and two years later, Hamas militants overran the territory, seizing control from Abbas' forces. Since then, Gaza militants have frequently launched rockets into Israel. Hamas rejects Israel's right to exist and opposes Abbas' peace efforts.
Overnight Wednesday, Israeli aircraft attacked what the army said was rocket-launching equipment in Gaza. The army said the airstrike was in response to rocket fire several hours earlier. There were no injuries on either side.
Deputy Defense Minister Danny Danon of the ruling Likud party argued that Israelis today would not accept the proposal made by Olmert five years ago.
Olmert has said he offered the Palestinians roughly 94 percent of the West Bank, with the equivalent of 6 percent of the land coming from Israeli territory in a "land swap" to allow Israel to keep some West Bank settlements. Olmert also proposed international administration of east Jerusalem.
Such an agreement "will not win support, not just from me, but also from the Likud and, I think, most of the nation," Danon told Israel Radio.
Abbas has said that while progress was made with Olmert, the sides still were unable to resolve their differences. With Netanyahu seemingly unwilling to offer as much as Olmert, it has raised troubling questions about whether these talks can succeed.
Still, there may be some reasons for faint optimism.
The Palestinians have seen their cause eclipsed by the unrest roiling the region. Continued Israeli settlement construction has further added to the sense that time could be working against them.
Israel also has reasons to push forward. After receiving upgraded status at the U.N. last year, the Palestinians have threatened to resume their campaign to join additional international bodies to pursue war crimes charges and other anti-Israel measures if the talks fail.
Many Israelis also fear the country could come under international pressure, or even economic boycotts, over the settlement issue.
Most demographers believe that without establishment of a Palestinian state, the Arab population living under Israeli rule will soon outnumber Jews. That would threaten Israel's character as a Jewish and democratic country.
In a sign of international discontent, the European Union recently said it would withhold funding to Israeli organizations that operate in the West Bank.
Gilad Sher, a former Israeli peace negotiator, praised the decision by the sides to conduct their talks in secret, saying it would help keep emotions in check.
But he said it was unlikely the sides could bridge their gaps.
"I think what is needed is to prepare and speak and cautiously hope for partial agreements, perhaps on issues of borders and security, economic issues and the policies of the Palestinian state. But we must also prepare for dead ends and blow-ups," he told Israel Radio.