The eyes of the world are on Wales as the Nato summit begins in Newport bringing together more than 60 heads of state and government.
US President Barack Obama started his visit with a trip to a local school with UK Prime Minister David Cameron.
They then returned to the Celtic Manor where he was greeted by Wales' First Minister Carwyn Jones.
Mr Cameron said the Nato summit would give a "real boost" to Wales and be a "brilliant advertisement".
The Prince of Wales, in his role as Admiral of the Fleet, will visit the Royal Navy's new Type 45 destroyer HMS Duncan before hosting an event at the Celtic Manor.
Earlier around 500 protesters marched from Newport city centre to the Coldra roundabout near the Celtic Manor Resort - the main venue for the two-day summit - far less than the thousands earlier predicted.
Another demonstration was planned for Thursday evening, this time in Cardiff, where world leaders were to meet for a working dinner at Cardiff Castle.
All Nato's 28 member countries were represented at the summit, with 4,000 delegates attending amid a security operation unprecedented in Britain.
Ukraine, Afghanistan, and the future of the Nato alliance were at the top of the agenda for politicians and diplomats.
Opening the first session, the Nato Secretary General, Anders Fogh Rasmussen, thanked Wales for its hospitality and said "the world has truly come to Wales".
On the eve of the summit Mr Cameron and President Obama said they were determined to "confront" militant group Islamic State.
Downing Street said it had brought together the US president, German chancellor, French president and the Italian prime minister for a crisis meeting with Ukraine's President Petro Poroshenko before the summit officially started on Thursday.
Still to come at Nato
- Prince Charles is expected to visit Royal Naval T45 Destroyer HMS Duncan at Cardiff Docks on Thursday in his role as the Admiral of the Fleet
- Later the prince will host a reception for the leaders at the Celtic Manor called Welcome to the World of Wales, where his official harpist Hannah Stone and the orchestra of the Welsh National Opera will perform
- In Cardiff, the city's castle will play host to the world leaders who will be treated to a meal prepared by award-winning celebrity chef Stephen Terry on Thursday night
- Meanwhile representatives from the international media will be entertained at Tredegar House in Newport
- On Friday morning an aerial display by military jets from nine countries, including the RAF's Red Arrows, will fly past Cardiff Bay at around 08:30 BST and head to Newport around 15 minutes later
The prime minister said holding such a crucial summit was a great opportunity for Wales.
Mr Cameron said: "I think it's a great moment to put the best face of Wales forward - the brilliance of Welsh industry, of Welsh people - a great place to locate, a great place to come. It's going to be a brilliant advertisement for Wales.
"There are lots of ways of promoting Wales and Welsh businesses and we should look at all of them, but this is one way we can give a real boost to Wales."
The summit is the first time the UK has hosted a Nato summit since Margaret Thatcher was still the British leader in 1990.
The event is being covered by 1,500 journalists.
"The largest gathering of international leaders ever to take place in the UK is starting in our home country here and now," said Wales' First Minister Carwyn Jones.
"The Nato Wales Summit is an exciting and historic moment for our country and I am confident we will shine on the world stage."
The summit also marks the first time a serving US president has been to Wales.
President Obama and David Cameron visited Mount Pleasant Primary School in Rogerstone, Newport, at 09:40 BST on Thursday, before joining VIPs and delegates for the official summit start.
As the 22-car convoy carrying the two leaders swept into the school it was greeted with cheers by a large crowd of well-wishers.
They joined a lesson both greeting children with "Bore da" - good morning in Welsh.
By 08:40 BST around 500 people had gathered outside gates, waiting for President Obama and Prime Minister Cameron to arrive, many carrying Welsh and US flags.
There were warnings of road congestion, especially between the Celtic Manor and central Cardiff on Thursday evening, when dinners for the visitors were being held at venues in the city.
Nato police said the M4 would not be closed during the summit.
Some road closures came into force in the Welsh capital on Wednesday night as the city went into "lockdown", and will remain in place until Friday evening.
Cardiff Airport has set up a special terminal to welcome Nato-related arrivals, but said it was "business as usual" for other air passengers.
Warships from the 28 Nato member states docked at Cardiff Bay in advance of the summit.
The Prince of Wales - Admiral of the Fleet - will visit the Royal Navy's new Type 45 destroyer HMS Duncan there on Thursday afternoon before hosting a reception at the Celtic Manor.
Nearly 10,000 police officers from 43 forces across England and Wales are on duty as part of a major security operation.
Steel fences surround the Celtic Manor and Cardiff city centre venues involved in the summit.
Around 100 campaigners set up a peace camp in Tredegar Park on the western outskirts of Newport, while a number of other groups have spoken of plans to stage protests during the summit.