Palestinian leader Mahmoud Abbas and Hamas' exiled political chief have failed to agree on forming a national unity government during talks in Syria.
The two men met for the first time since June 2005
However they said progress had been made and that talks on the issue would resume within two weeks.
Mr Abbas and Khaled Meshaal said although differences remained they would be resolved through dialogue.
The talks came amid a power struggle between their factions in Gaza, in which dozens of people have died.
Mr Abbas has threatened to call fresh elections unless a deal on forming a national unity government is reached.
The BBC's Rachel Harvey in Damascus says the official line is that progress has been made and negotiations will continue back in Gaza.
But she says after all the diplomatic pressure to get these two men in the same room - not least from their Syrian hosts - many here are left wondering what has really been achieved.
'Need for dialogue'
Following three hours of talks, Mr Abbas and Mr Meshaal said efforts to form a national unity government had "covered a great distance" and negotiations would resume within two weeks.
"There are still points of disagreement between us but we will sort it through dialogue," Mr Meshaal said.
"We stress that dialogue is the only language allowed for solving our differences... It is not normal to fight."
Mr Meshaal said there was agreement between the two sides on rejecting the idea of temporary borders for a transitional Palestinian state.
"We assure people that we are not taking anything away from our national rights as Palestinians", he said.
For his part, Mr Abbas described the discussions as "fruitful".
The two men repeated their call for an end to the internal fighting which has left more than 30 Palestinians dead.
Hamas roundly defeated Mr Abbas' Fatah faction in parliamentary elections a year ago, but their victory prompted an international aid boycott which has crippled the Palestinian economy.
Fatah advocates negotiations with the Israelis on a future Palestinian state, while Hamas refuses to recognise Israel's right to exist.