The two-day talks in Islamabad between the countries' foreign secretaries come ahead of the Pakistani foreign minister's visit to India in July.
Relations plummeted after Pakistan-based militants attacked the Indian city of Mumbai in 2008.
But earlier this year leaders vowed to resume dialogue.
Gunmen killed 166 people when they attacked India's commercial capital in 2008. After initial denials, Pakistan acknowledged that attacks had been partially planned on its territory and that the only gunman captured alive was one of its citizens.
Despite charging seven people in connection with the attacks, the Pakistani authorities have yet to convict anyone.
'No breakthrough expected'Relations between the nuclear-armed rivals have been slowly improving in recent months, although talks ended in acrimony last July with the two sides indulging in a public spat over Kashmir.
In March Indian Prime Minister Manmohan Singh hosted his Pakistani counterpart Yousuf Raza Gilani for the cricket World Cup semi-final between the two sides, held in the Indian city of Mohali.
At the time Mr Singh said cricket had been a "uniting factor" and that they should cast aside "ancient animosities".
But correspondents say that no breakthrough is expected during the talks between the foreign secretaries.
Indian Foreign Minister SM Krishna said all "issues concerning terrorism and various other issues between our two countries will be discussed".
"Let not expectations be pitched too high because this is one of the relationships we are trying to cultivate in the last few months," he said.
"We are making a determined bid to work out a cordial relationship."
India's Foreign Secretary Nirupama Rao has said that India sought a "satisfactory closure" from Pakistan on the Mumbai attacks.
In 2009, Pakistan charged seven people in connection with the attacks, including the suspected mastermind Zaki-ur-Rehman Lakhvi, who is alleged to head the outlawed militant group Lashkar-e-Taiba.
"There is an ongoing trial in Pakistan and it has moved rather slowly," Ms Rao said.
"When we talk of closure, what we are implying is that justice should be done in this matter and those responsible for triggering this terror attack and also those who conspired to attack our people should be brought to justice," she said.
Pakistan's foreign ministry spokeswoman Tehmina Janjua said the talks would also include the dispute over Kashmir.
Kashmir is claimed by both India and Pakistan in its entirety but has been divided since 1948. It has been the cause of two wars between the countries.
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