The protesters held placards calling for the province's independence from Serbia and the withdrawal of the United Nations mission (UNMIK) that has governed Kosovo since the end of the 1998-99 war between Belgrade forces and ethnic Albanian guerrillas.
"Holkeri, don't speak in our name," said one banner in reference to UNMIK chief Harri Holkeri, who is leading the Kosovo delegation at the talks which began in Vienna earlier on Tuesday.
The demonstration was organised by Kosovo's National Movement party, a grouping which holds only one seat in the 120-member assembly.
The dialogue is the first between Kosovar Albanian authorities and the Serbian government since the war, which cost thousands of lives and drove hundreds of thousands from their homes.
The initiative has been heavily promoted by the UN and the European Union. However, many in the ethnic Albanian majority see it as a step back from their ultimate goal of independence.
The issue of Kosovo's final status is not on the agenda for the talks which have been limited to "practical" concerns such as transport, energy and missing people.
Refusal to attend
Kosovo Prime Minister, Bajram Rexepi, refused to attend the opening session of the dialogue after parliament failed to support his participation.
The Kosovo delegation included Kosovo President, Ibrahim Rugova, and parliament speaker Nexhat Daci.
The Serbian delegation was led by Prime Minister, Zoran Zivkovic, and Nebojsa Covic, the deputy prime minister in charge of Kosovo matters.