Russian President Vladimir Putin has become the first foreign leader to be hosted by President George W Bush at his family's summer retreat in Maine.
The house at Kennebunkport is described as the "inner sanctum"
The informal visit to Kennebunkport began with a ride in the family speedboat, driven by former President George Bush Snr, then a lobster dinner.
But despite the apparent bonhomie, the BBC's James Coomarasamy says relations are testy and talks expectations low.
Ties have been strained by US plans for a missile defence system in Europe.
Before he left Russia, Mr Putin said he was looking forward to "friendly" talks with Mr Bush.
"I hope that the dialogue with this person with whom I've formed good, I would say friendly, relations will take place in exactly that spirit," Russian news agency Interfax quoted him as saying.
For the US side, the meeting is about restoring a sense of trust to a relationship which of late has become increasingly fractious, our correspondent says.
Mr Putin arrived on Sunday for the two-day visit to Walker's Point, the seaside cottage complex built by President George W Bush's great-grandfather, which has served as the Bush family summer retreat since.
One official described Walker's Point to the BBC as the "inner sanctum" and the atmosphere was certainly more intimate than usual as Mr Putin was greeted at the airport in Portsmouth, New Hampshire, by Mr Bush Snr and then met on the drive of the house by his son, the First Lady Laura Bush and other family members.
Mr Putin had brought flowers for both Laura Bush and former First Lady Barbara Bush. US Secretary of State Condoleezza Rice also joined the group.
"It's pretty casual up here, as you know, unstructured," President Bush told reporters as he waited for his guest.
It was a far cry from recent relations between Moscow and Washington, which soured amid Russian anger at the proposed US missile defence shield - particularly plans to site a radar in the Czech Republic and 10 anti-missile interceptors in Poland.
Nato and the US say the facilities would not be directed at Russia, but at "rogue" states such as North Korea and Iran.
But Mr Putin recently warned that Russia would target its missiles back at Europe if Washington went ahead with the programme.
Earlier this week, Nato Secretary General Jaap de Hoop Scheffer urged Russia and the West to tone down their rhetoric, saying there was "no reason to speak with megaphones".
The UN-administered province of Kosovo is another issue on which the two sides disagree.
Western countries support a plan that would give the territory independence from Serbia, but Russia - which wields a veto in the UN Security Council - says further negotiations are needed.
Demonstrators held a protest near the summer retreat
The UN secretary general said he hoped the meeting between the two leaders could be used to resolve their differences over Kosovo's future.
He added that it was of key importance that Russia - traditionally a Serb ally - backed the proposal.
"I hope sincerely that this summit meeting... between President Putin and President Bush will find a good solution to this issue," Ban Ki-moon said.
President Bush is also expected to raise the issue of Iran, hoping to gain Russian support for wider economic sanctions aimed at pressuring Iran over its nuclear programme.
As Mr Putin arrived, more than 1,000 demonstrators protested nearby, criticising his policy on Chechnya and calling for Mr Bush to be impeached over the war in Iraq.