Japanese Prime Minister Naoto Kan and his Chinese counterpart, Wen Jiabao, have met for the first time since a diplomatic dispute erupted last month.
Both spoke of the need to improve ties at the brief meeting on the sidelines of a summit in Europe.
China said they agreed to hold high-level talks, at an appropriate time.
But the leaders also reiterated claims to a disputed area in the East China Sea where a boat collision sparked the worst row between the two in years.
Japan arrested the crew of a Chinese fishing boat in disputed waters. The crew were later released.
The uninhabited islands, which China calls the Diaoyu and Japan the Senkaku islands, lie near potential oil and gas reserves.
The talks at the Asia Europe Meeting (ASEM) in Brussels are seen as a significant step in starting to repair strained relations.
Last month, Mr Wen refused to meet Mr Kan on the sidelines of a United Nations summit.
"They agreed to improve relations, to resume exploring ties," said Japanese spokesman Noriyuki Shikata.
The leaders agreed that "deterioration in bilateral ties over maritime collisions is not desirable", Japan's Kyodo news agency said.
They also agreed to "hold high-level bilateral talks on regular basis" but no new meeting was set.
The BBC's Tokyo correspondent Roland Buerk said the two leaders had appeared to avoid each other during the ASEM.
But after the formal talks were over in Brussels, they met in a corridor outside the conference venue in what Mr Kan described as a "spontaneous" encounter.
Mr Kan has been criticised in Japan for seeming to cave in to Chinese pressure after the detained Chinese fishing boat's captain was eventually allowed to go home.
On Saturday, conservative activists demonstrated in Tokyo against what they see as a diplomatic defeat. And opinion polls show support for the prime minister has fallen among the Japanese public.