The leaders had fallen out earlier in the year, accusing each other of not doing enough to fight armed groups, particularly in the mountainous tribal regions that have been in the international spotlight since the September 11, 2001 attacks on the US.
But, in a news conference in Islamabad, the capital, they said their talks had been helpful in addressing the threat from al-Qaeda and the Taliban along their mutual border.
Musharraf said: "We have to work together to function well for the mutual benefit of both the countries, and that is what Pakistan looks forward to."
He said the neighbours, both US allies, had to work together to counter "this menace of extremism and terrorism, which is destroying both our countries".
Karzai, who repeatedly referred to Musharraf as "my brother", said they had discussed issues of vital importance to the future of the two nations.
"We discussed them in sincerity and in a manner that enhanced our understanding," he said.
"People in both the countries are suffering - suffering a lot.
"And it is incumbent upon us - the leadership of the two countries, the governments - to find ways to bring peace and stability to each home, each family, in both countries."
It was their first meeting since August, when they attended a tribal assembly to address the threat of Taliban and Al-Qaeda fighters.
Accusations
Afghan officials have repeatedly said that Taliban members are being trained and armed in Pakistan and sent across the border to attack Afghan security forces and 60,000 international troops working with them.
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Bhutto returned from self-imposed
exile earlier in the year [AFP] |
They have accused Pakistan of not doing enough against fighters, who are opposed to Afghanistan's internationally backed efforts to rebuild from decades of war.
Benazir Bhutto, a Pakistani opposition leader, also accused Musharraf on Tuesday of failing to stop the spread of militancy. She said she would crack down on "extremist groups" if she wins in parliamentary elections on January 8.
Bhutto, a former prime minister who returned from exile to lead her opposition party in the poll, told about 4,000 supporters that "extremism and terror" flourished across the country since Musharraf took power eight years ago in a military coup.
"The areas between Pakistan and Afghanistan became a haven for extremists, and the extremism and terrorism is flowing down into other areas," she said.