Pope Benedict has met the head of an ultra-conservative Catholic group expelled by the Church 17 years ago.
The society has accused the Vatican of becoming too liberal
The Pope and Bishop Bernard Fellay, leader of the Society of Saint Pius X, have agreed to try to end the rift.
It was his consecration as bishop with three others in 1988, without Rome's permission, which led the fraternity being condemned as schismatic.
The society has criticised the Vatican for becoming too liberal and continues to celebrate Mass in Latin.
Pope Benedict and Bishop Fellay reached the agreement after meeting at the Pope's summer residence, Castel Gandolfo, south of Rome.
Vatican spokesman Joaquin Navarro Vals said both men spoke of "their common will to proceed in stages and within reasonable delays" to achieve the return of the society into the Catholic fold.
The Society of Saint Pius X was set up in opposition to liberalising changes introduced by the Second Vatican Council in the 1960s, which included allowing Mass to be celebrated in local languages, instead of Latin.
Its founder, Archbishop Marcel Lefebvre, was excommunicated in 1988 by Pope John Paul II for consecrating the four bishops without Rome's permission.
Bishop Fellay succeeded Archbishop Lefebvre, who died in 1991, as superior general of the fraternity based in Econe, Switzerland.
He said Benedict's election to succeed John Paul II had brought about a "glimmer of hope" to find a way out of the "profound crisis" inside the Catholic Church.
The new pope, who has promised to reach out to Christians separated from Rome, is known to be sympathetic to those Catholics who regret the abandoning of the Latin Mass four decades ago, says the BBC's David Willey in Rome.