Six world powers - the US, UK, France, China, Russia and Germany - and Iran are meeting in Istanbul in Turkey.
Iran says its nuclear programme is peaceful, but critics suspect it of seeking to develop nuclear weapons.
Israel has hinted in recent months that it may carry out a pre-emptive strike.
Michael Mann, a spokesman for EU foreign policy chief Catherine Ashton, said of the talks: "There is a positive atmosphere... contrasting with the last time."
The BBC's James Reynolds, in Istanbul, says the envoys had earlier set the bar pretty low - saying they did not expect detailed, substantive proposals from either side.
What they wanted to see, he says, was whether Iran was ready to seriously engage and, if that happened, there might be another round of talks in four to six weeks time.
After a two-and-a-half-hour morning session, there was general agreement among the six world powers, known collectively as the P5+1, that there had been progress.
Mr Mann said: "The principles for future talks seem to be there."
One diplomat told Associated Press that Iran appeared ready to discuss its uranium enrichment programme and that the Iranian team had referred to supreme leader Ayatollah Ali Khamenei's "fatwa" on nuclear arms.
Another session later in the day involves bilateral meetings, possibly including a rare US-Iran encounter.
Ahead of the talks, Baroness Ashton said she hoped they would be "the beginnings of a sustained process".
"What we are here to do is to find ways in which we can build confidence between us and ways in which we can demonstrate that Iran is moving away from a nuclear weapons programme."
Chief Iranian negotiator Saeed Jalili said the talks would "serve the dignity of the Iranian nation".
US President Barack Obama earlier described this as a "last chance" for diplomacy to work.
The P5+1 hope eventually to persuade Iran to reduce its enrichment of uranium and fully open up its nuclear facilities to inspectors from the International Atomic Energy Agency (IAEA).
There are suggestions that the stringent sanctions on Iran could be reduced if it complies with the requests.
The last series of international talks broke down in January 2011 after the parties failed to agree on any issues.
Since then, the IAEA expressed concern that Iran had failed to co-operate with its inspectors and had carried out activities "relevant to the development of a nuclear explosive device".
Israel, which believes a nuclear-capable Iran would be a direct threat to its security, has warned that time is running out to prevent that outcome.
Prime Minister Benjamin Netanyahu has said he would never allow Israelis to "live in the shadow of annihilation", and hinted his country is ready to strike Iran's nuclear facilities if diplomacy does not work soon.
President Obama has warned against "loose talk of war", while stressing that all options remain open.
Key talks on Iran's controversial nuclear programme, which have resumed after a 15-month impasse, have been described as "positive" and "totally different" from the last meeting.