Hamas, which holds a majority in the new Palestinian parliament, has been seeking partners for a broad-based coalition, in part to soften international opposition to it.
Wednesday's meeting was the first between the rival Hamas and Fatah. Officials in Fatah, however, said it is unlikely they will join the Hamas in the government.
Mahmoud Abbas, the Palestinian president, appointed Hamas lawmaker Ismail Haniya on Tuesday to be prime minister, giving him five weeks to cobble together a government.
The Hamas-Fatah talks took place at the home of Hamas lawmaker Mahmoud Zahar. The Fatah delegation included lawmaker Azzam al-Ahmad and Ahmad Hilles, the Fatah leader in Gaza.
Abbas, whose long-dominant Fatah faction was crushed by Hamas in a 25 January parliamentary election, met Haniya in Gaza on Tuesday and gave him a formal letter authorising him to form a government.
In a letter to Haniya, Abbas also spelt out guidelines for a future Hamas administration, including a commitment from the group to abide by past interim peace accords with Israel.
Khaled Meshaal, Hamas's political leader, said: "Talking to Israel is a waste of time as long as there is no talk about withdrawing from Palestine."
Facing a financial crisis after Israel halted monthly tax payments to an already cash-strapped Palestinian Authority, Meshaal said in Tehran that Iran would play an increasing role in Palestinian affairs.
US and Israeli officials are concerned Tehran will try to exert control over a Hamas-led government, making the resumption of peace talks less likely.
Iran's Supreme Leader Ayatollah Ali Khamenei has called on Islamic countries to help fund a Hamas-led government.
The US and Israel have long accused Iran of funding Hamas' campaign against Israel. But officials said they doubted Iran would be able to sustain the Palestinian Authority.