The thorny issue of Turkey's military presence in Cyprus topped the billing in the Swiss Alpine resort of Crans-Montana, with officials hopeful of a breakthrough on the decades-old division of Greek- and Turkish-Cypriot communities.
"The atmosphere was positive... There was a remarkably positive attitude," UN political affairs chief Jeffrey Feltman told reporters at the talks.
"This is an historic opportunity to solve a problem that has been there for decades."
Feltman added that UN chief Antonio Guterres would join negotiations later this week.
Divided since 1974
EU-member Cyprus has been divided since 1974, when Turkish troops invaded the island in response to an Athens-inspired coup attempt seeking union with Greece.
Turkey, which later occupied the island's northern third, maintains more than 35,000 troops in Cyprus, and Nicosia remains Europe's last divided capital.
UN envoy Espen Barth Eide has presided over peace efforts since 2014, and the last round of talks in January ended with a number of issues - namely security, property and power sharing - unresolved.
"We had a good beginning, actually beyond what we expected," Eide told reporters after the opening session on Wednesday.
"Hard work will remain... We will do what is possible to facilitate, but at the end of the day of course it's the responsibility of the conference participants to go that final mile."
President Nicos Anastasiades, the Greek Cypriot leader who heads the island's internationally recognised government, and his Turkish Cypriot counterpart Mustafa Akinci are representing their respective communities during talks.
They were joined Wednesday by the foreign ministers of Cyprus's so-called guarantor powers, Greece and Turkey, along with EU foreign policy chief Federica Mogherini.
British Foreign Minister Boris Johnson, whose country also acts as a guarantor and retains two military base areas on the island, left Crans-Montana after discussions over dinner Tuesday night.
Turkish counterpart Mevlut Cavusoglu was quoted by state-run Anadolu news agency as saying: "A solution must now be found for this problem that has lasted 50 years."
Security tops agenda
Front and centre at the summit is a new security arrangement for a post-settlement federal Cyprus, particularly the presence of Turkish troops - historically a major sticking point in peace efforts.
Turkey has indicated it may be willing to sharply reduce its troop numbers on the island, but analysts say Ankara is unlikely to agree to a total military pullout.
Eide said progress was being made in other areas such as governance and power sharing, property, economy and EU matters, but added that "there are a few very important issues" yet to be resolved.
Any deal would need to be put to dual votes among Greek and Turkish Cypriots. An agreement reached in 2004 was supported by Turkish Cypriots but overwhelmingly rejected by the island's Greek speakers.
A small group of demonstrators greeted official delegations as their convoys arrived Wednesday, urging leaders to "finish what they started" and reach a settlement.
'Hard, not impossible'
More than 2,000 people went missing during sectarian in-fighting and massacres carried out by Greek and Turkish Cypriot militias that culminated in the 1974 invasion.
Eide said that the Crans-Montana conference remained Cyprus' "best chance" at reunification.
"Of course the biggest success will be an actual comprehensive agreement. That's hard, not impossible," he said.
"Short of that, we could have... a breakthrough on the key issues."
But it remains to be seen how leaders can overcome decades-old differences, including potentially rehousing and compensating thousands of families who fled their homes in 1974 - a programme that could end up costing billions of euros.
James Sawyer, a Turkey and Cyprus analyst at the Eurasia Group think tank, put the chances of success in the Swiss Alps at just 15 percent.
"Both sides have been trading blame for the talks hitting roadblocks," he said. "The summit is likely to end in stalemate."
By Patrick Galey