In his inaugural speech on Thursday, which also happened to be the ninth anniversary of the US invasion, Karzai said a lot was expected of the council.
"The Afghan people in each province, district and village are expecting a lot from this peace council," he said.
"The high peace council is a source of hope for the Afghan people," he said, adding that the international community is supporting the panel.
Karzai has long called on anti-government forces to renounce violence, sever ties with terrorists and embrace the Afghan constitution.
However, questions are being raised about the composition of the council.
Al Jazeera's Sue Turton, reporting from the Afghan capital, Kabul, said the presence of several ex-Taliban fighters and warlords in the 70-member council has been criticised by rights groups.
"Human rights activists are saying that the international community shouldn't be backing this high council, it should bring in people who know more about peace and about war," she said.
But close allies of Karzai have justified the council's make-up, saying these are the kind of people that understand what it takes to bring about a compromise.
Source: Al Jazeera and agencies