The talks were scheduled to start three days ago but were delayed by rows over logistics and security.
The high level meeting involves President Laurent Gbagbo, interim Prime Minister Charles Konan Banny, rebel leader Guillaume Soro, political opposition leader Alassane Ouattara and former president Henri Konan Bedie.
They are the first talks to be organised without international mediation and the first since 2002 to be held in the Ivory Coast itself.
Countless meetings have been held with the help of regional and international brokers in a bid to end the stalemate in the conflict dividing West Africa's once peaceful and powerful economic hub.
The leaders are to expected to review the state of the peace negotiations and to identify the processes need to move it forward.
They are also expected to discuss the constitution, the leadership of an independent electoral commission, and the disarmament and the dismantling of armed groups.
Sources close to the talks said they began in a relaxed atmosphere, reporting having heard laughter from inside the room where the five leaders met.
On the sidelines, senior officials from each of the political groupings, including senior military chiefs and members of Mr Banny's government, met in a separate room.
According to UN Security Council resolution 1633, Ivory Coast has to organise elections by October 31, after failing to do so last year.
A government official says the Yamoussoukro summit is meant to get the political players to "reassume responsibility for settling the conflict by reopening dialogue... (and) encourage Ivorians to take back the initiative for settling the crisis themselves."