King Abdullah chaired the opening session of the three-day conference
Saudi Arabia's monarch has urged Muslims to speak with one voice in preparation for interfaith dialogue with the Jewish and Christian worlds.
King Abdullah was speaking at a three-day conference in Mecca, attended by hundreds of Muslim delegates.
The king, whose country is mainly Sunni Muslim, said extremists were exploiting the tolerant nature of Islam.
As well as extremism, delegates hope to tackle what is seen as the negative perception of Islam in the West.
BBC Arab affairs analyst Magdi Abdelhadi says the meeting is supposed to be the Saudi answer to the controversial "clash of civilizations" thesis of US academic Samuel Huntington.
Muslim writers often cite Prof Huntington's ideas as evidence of Western hostility to Islam in particular.
'Voice of justice'
King Abdullah entered the hall alongside Iranian politician Akbar Hashemi Rafsanjani, who sat beside him on the stage.
Correspondents say the message was that the Sunni kingdom was now in agreement with moderate Shia Muslims such as Mr Rafsanjani, a former Iranian president.
"You have gathered today to tell the whole world that... we are a voice of justice and values and humanity, that we are a voice of coexistence and a just and rational dialogue," King Abdullah told the delegates.
Extremism was a challenge to Islam that targeted the "magnanimity, fairness and lofty aims" of the religion, he said.
"That's why this invitation was extended - to face the challenges of isolation, ignorance and narrow horizons, so that the world can absorb the good message of Islam."
Mr Rafsanjani said Saudi Arabia "presented a great message to all humanity in the world" and appealed for Shia-Sunni dialogue and mutual support.
"We should... not weaken each other or sully each other's reputation," he said. "As a Muslim and a Shia and an expert in Islamic issues ... I tell you that there are many things in common and there's no need to look at differences."
Delegates said the aim was to agree on a global Islamic charter for dialogue with Christians and Jews, ahead of a call by Saudi Arabia for an interfaith dialogue.
Saudi Arabia currently has no diplomatic ties with Israel, and non-Muslim religious services and symbols are banned in the kingdom.
King Abdullah has said Saudi Arabia's top clerics, who like the ruling family are from the hardline Wahhabi trend of Sunni Islam, have authorised his interfaith approach.
Mainly Sunni Saudi Arabia and mainly Shia Iran stand on opposite sides of many of the conflicts dividing the Muslim world, and some observers say political rifts are being laid bare, such as different attitudes towards the US.
Mr Rafsanjani also urged the world's one billion Muslims to stop Washington controlling the natural resources in their countries - a pointed comment in oil giant Saudi Arabia, a top ally of Washington.
"Why should this tremendous group be weak before the international arrogance?" he said, using the Iranian revolutionary term for the US.
Earlier this week, a group of independent clerics issued a statement saying Shia political movements like the Iranian-backed Hezbollah in Lebanon were posturing against Israel to hide an anti-Sunni agenda.