Major world powers have offered Iran limited sanctions relief in return for a halt to the most controversial part of its nuclear programme.
Iran has promised to respond with a proposal on the same scale.
The talks in Kazakhstan were the first in eight months between Iran and the five permanent members of the UN Security Council plus Germany.
They relate to a decade-old dispute that threatens to trigger another war in the Middle East.
Iran has used the time since the last meeting in June to further expand activity that the West suspects is aimed at enabling it to build a nuclear bomb.
Israel has suggested it will prevent such a move by force if diplomacy fails.
The two-day negotiations in the city of Almaty follow inconclusive meetings last year in Istanbul, Baghdad and Moscow.
US Secretary of State John Kerry said in Berlin that he hoped Iran "will make its choice to move down the path of a diplomatic solution".
A Western official who declined to be named said the talks had been "useful" and confirmed they would continue tomorrow as scheduled.
But with the Islamic Republic's political elite preoccupied with worsening infighting before a presidential election in June, few believe the meeting will yield a quick breakthrough.
"It is clear that nobody expects to come from Almaty with a fully done deal," said a spokesman for the European Union's foreign policy chief Catherine Ashton, who oversees contacts with Iran on behalf of world powers.
A US official said yesterday that the offer to Iran - an updated version of one rejected by Iran last year - would take into account its recent nuclear advances, but also take "some steps in the sanctions arena".
This would address some of Iran's concerns but not meet its demand that all sanctions be lifted, the official said.
A Western official later said the powers had formally presented the offer during today's talks but gave no details.
In Almaty, a source close to the Iranian negotiators told reporters: "Depending on what proposal we receive from the other side we will present our own proposal of the same weight.
"The continuation of talks depends on how this exchange of proposals goes forward."
Iranian media also said the talks would continue, without saying whether the Iranian proposal had been presented.
At best, diplomats and analysts say, Iran will take the joint offer from the United States, Russia, France, Germany, Britain and China seriously and agree to hold further talks soon on practical steps to ease the tension.
"We are looking for flexibility from the Iranians," said Ms Ashton's spokesman, Michael Mann.
But Iran, whose chief negotiator Saeed Jalili is close to Supreme Leader Ayatollah Ali Khamenei and is a veteran of Iran's 1980s war against Iraq and the Western powers that backed it, has shown no sign of willingness to scale back its nuclear work.
It argues that it has a sovereign right to carry out nuclear enrichment for peaceful energy purposes, and in particular refuses to close its underground Fordow enrichment plant, a condition the powers have set for any sanctions relief.
A UN nuclear watchdog report last week said Iran was for the first time installing advanced centrifuges that would allow it to significantly speed up its enrichment of uranium, which can have both civilian and military purposes.
Tightening Western sanctions on Iran over the past 14 months are hurting Iran's economy and slashing oil revenue. Its currency has more than halved in value, which in turn has pushed up inflation.
The central bank governor was quoted yesterday as saying Iran's inflation was likely to top 30% in coming weeks as the sanctions contribute to shortages and stockpiling.
But analysts say the sanctions are not close to having the crippling effect envisaged by the US and have not prompted a change in Iran's nuclear course.
Western officials said the powers' offer would include an easing of restrictions on trade in gold and other precious metals if Iran closes Fordow.
The facility is used for enriching uranium to 20% fissile purity, a short technical step from weapons-grade.
