A Nato summit has opened in Portugal with leaders meeting to discuss new threats such as cyber-warfare and how to protect its 28 member states from ballistic missile attack.
On Saturday, they will debate the war in Afghanistan, with plans to bring combat operations to an end by 2014.
US President Barack Obama has said the summit will revitalise the alliance for the 21st Century.
Russian President Dmitry Medvedev is attending - a sign of warming ties.
Mr Obama said Nato was moving to a new phase in Afghanistan: "a transition to Afghan responsibility that begins in 2011 with Afghan forces taking the lead for security across Afghanistan by 2014."
Afghan President Hamid Karzai, who is scheduled to address the summit on Saturday, has said he wants Nato to hand back control of the country's security by the end of 2014 - a deadline the US has described as realistic but not set in stone.
Pentagon press secretary Geoff Morrell said the deadline had existed for some time as "an aspirational goal" but that this did not mean all coalition forces would have to leave by that date.
Meanwhile, the US has announced it is to send tanks to Afghanistan for the first time.
Defence officials say 14 M1A1 Abrams tanks will be deployed in the southern Afghan province of Helmand next month, along with 115 extra Marines.
Canadian and Danish troops have already used tanks in Afghanistan.
The Lisbon talks are expected to shape the future of Nato at a time of shrinking budget cuts and expanding challenges, says BBC defence correspondent Caroline Wyatt.
Key to the future credibility of the alliance will be ensuring a workable transition in Afghanistan, our correspondent adds.
Nato Secretary General Anders Fogh Rasmussen told the BBC on Friday that a security handover to Afghan forces was realistic by the end of 2014.
"We will make a very important announcement at the summit in Lisbon that a gradual transition to leave Afghan responsibility is about to start at the beginning of 2011 and we hope to see this gradual process completed by the end of 2014, and I find that roadmap realistic," he told Radio 4's Today programme.
Asked about US plans to start bringing troops home next year, he said: "I'm not aware of concrete plans for withdrawal of troops.
"On the contrary, I think all allies are prepared to stay committed as long as it takes to finish our job."
There are some 130,000 international troops attached to the Nato-led International Security Assistance Force (Isaf) in Afghanistan.
The BBC's Paul Wood in Kabul says the last thing Nato wants is for its military campaign to end with parts of Afghanistan in the hands of warlords and an opium mafia.
Nato generals do not use the term "victory" any more.
But our correspondent says if the violence is at a level that can be managed by Afghan forces, Nato will consider it has done its job - and the troops will start coming home.
Meanwhile, Dmitry Medvedev will become the first Russian president to attend a Nato summit since his country's conflict with Georgia in 2008, when he meets leaders on Saturday.
The alliance is keen to build bridges with Moscow, and a key issue at the summit will be agreeing plans for a joint study of missile defence.
The efforts have been aided by US President Barack Obama's insistence that the US will ratify a new nuclear arms treaty with Russia.
He said there was "no higher national security priority" for the government before the start of the new Congress in January.
Moscow is promising logistical help for Nato in Afghanistan by easing restrictions on transit routes into the country.
The summit will also debate proposals on changing Nato's command structure, in an attempt to reduce bureaucracy and expenditure.
The changes could see the number of Nato agencies which look after areas such as logistics, communications, research and training cut from 14 to three.