Hamas and Fatah have been bitterly divided
Rival Palestinian factions are meeting in Cairo, at the start of a process they hope will pave the way for a national unity government.
Cross-party committees are due to start work on a number of key issues.
The most challenging ones are reforming the security services and the Palestine Liberation Organisation.
Divisions between the two main groups - Fatah and Hamas - are making rebuilding Gaza in the aftermath of Israel's military campaign there more difficult.
The meeting began with speeches from Egyptian Foreign Minister Ahmed Abul Gheit and the powerful intelligence chief Omar Suleiman who called on the factions to work hard towards reconciliation.
"The Palestinian people are watching the results of these talks, so please do not let them down," Mr Suleiman said.
January 2006 - Hamas wins Palestinian Authority legislative election
March 2006 - Hamas government sworn in. US and EU suspend ties
February-March 2007 - Fatah and Hamas agree to form coalition to end growing factional warfare
June 2007 - Hamas seizes control of Gaza from Fatah after continued fighting. Unity government dissolved, Israel tightens blockade of Gaza Strip
While internationals donors have pledged billions of dollars to the reconstruction of Gaza, they are not willing to deal directly with Hamas, which is widely viewed as a terrorist organisation.
Israel, which also refuses to deal directly with Hamas, continues to maintain a strict blockade of Gaza, allowing in only essential food and medicine.
On Saturday, Palestinian Authority Prime Minister Salam Fayyad resigned ahead the power-sharing talks, a move that is intended to pave the way for the formation of a national unity government.
Leaders of the rival Palestinian factions met last month in Cairo and promised a new era of reconciliation.
Committees have also been set up to look into holding presidential land legislative elections.
A previous unity agreement fell apart after Israel and its international backers refused to deal with Hamas, which refuses to recognise Israel.
Inter-factional fighting in Gaza came to a head in the summer of 2007 when Hamas fighters ousted the pro-Fatah security forces and overthrew PA control.
As well as continued tension, both sides have been accused of conducting politically motivated arrests and the torture of rival faction members.
Egypt revived the call for Palestinian reconciliation talks in November.
However, Hamas withdrew from the talks, complaining that Fatah continued to arrest Hamas members in the West Bank.
Efforts to secure a reconciliation have gained strength since Israel's three-week military offensive in Gaza, which ended on 18 January.
The Fatah and Hamas sides have fundamental differences over how to deal with Israel. While Fatah has renounced violence, Hamas refuses to recognise Israel. Hamas is prepared to accept a short-term truce but it reserves the right to fight Israel.