Prime Minister Nouri Maliki has appealed to Iraq's neighbours to help tackle the insurgency which has left tens of thousands dead since 2003.
The violence continued as the delegates discussed security
He was addressing an international meeting in Baghdad which brought together envoys from the US, Iran and Syria for the first time in years.
The US blames both for stoking the violence, but the meeting was said to be constructive and positive.
As talks started, a car bomb in Sadr City killed at least 20 people.
About 40 people were injured in the attack in the largely Shia neighbourhood of Baghdad. At about the same time, at least two mortar shells landed near the conference venue but injured no-one, a witness said.
The one-day conference on ways to restore stability in Iraq was also attended by envoys from other members of the UN Security Council, the Arab League, the Gulf Co-operation Council as well as other states bordering Iraq.
Observers say it was seen as an attempt to break the ice, and the beginning of a process.
Iraqi Foreign Minister Hoshyar Zebari said the meeting had decided to set up several committees to discuss issues including security, refugees and energy supplies.
The US has had no diplomatic relations with Iran for almost three decades, and its ties with Damascus have been severely strained.
The Americans are said to have shaken hands with the Iranian and Syrian envoys and US Ambassador Zalmay Khalilzad said there had been "direct exchanges and meetings and discussions" between the US and Iranian delegation.
"The discussions with Iran and with others with regard to Iraq was instructive, businesslike, problem-solving in its orientation. I think I would leave it at that," Mr Khalilzad said.
He also appeared to address Iranian complaints that several Iranian diplomats were being held by US troops after being detained in Iraq in January.
He told the conference: "The coalition does not have anyone in detention who is a diplomat."
'In the front line'
Our correspondent says that for Iraq the meeting was an important opportunity to bring together neighbours and other powers who have often seemed to be using the country as a proxy battlefield for their own struggles.
In his opening address, Prime Minister Maliki called terrorism "an international epidemic" for which the people of Iraq were paying the price.
The conference venue is just outside the fortified Green Zone
"Iraq is the first front line in facing this terrorism - which needs a lot of international co-operation to confront it - especially the neighbouring countries in particular to support us in this great war," he said.
Iran is a key supporter of the Shia majority in Iraq, while Saudi Arabia and other Sunni Arab states would like to see a better deal for Iraq's Sunni minority.
But our correspondent says Iran and Saudi Arabia have been working closely together recently to help defuse similar conflicts in Lebanon and the Palestinian Authority and there are hopes that this spirit will give impetus to the conference.
Ahead of the talks, US President George W Bush - on a Latin American tour - said the US message to Syria and Iran was unchanged.
"We expect you to help this young democracy and we will defend ourselves and the people in Iraq from weapons being shipped," he said.
The conference comes amid a new security drive by US and Iraqi forces.
Mr Bush has ordered in more than 20,000 additional troops to try to quell the unrest.