The two-day meeting in Geneva ends a six-month hiatus over the Islamic republic's refusal to curb uranium enrichment in exchange for easing punishing international sanctions.
Foreign Minister Mohammad Javad Zarif was to present Iran's stance to the so-called P5+1 group of the United States, Britain, France, China and Russia plus Germany.
The proposal, entitled "Closing an Unnecessary Crisis, and Opening a New Horizon", contains three steps that could settle the long-running nuclear standoff "within a year", Zarif said yesterday.
But he said the initial step could be achieved "within a month, or two, or even less".
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Negotiators have however downplayed the chances of a major breakthrough, despite hopes raised since conservative Mahmoud Ahmadinejad wrapped up two four-year terms as Iran's president.
Rouhani, who took office in August, has promised transparency on the nuclear programme and engagement to eventually lift the trade embargo that is strangling Iran's economy by hitting oil exports and access to global banking.
European Union foreign policy chief Catherine Ashton, who is chairing the talks, said she had "cautious optimism but a real sense of determination".
Officials said the talks, taking place at the UN's European base in Geneva, were to be conducted in English for the first time.
A senior US administration official said detail was the key, and noted that Washington's team included sanctions specialists.
"We are quite ready to move. But it depends what they put on the table," the official told reporters in Geneva.
"In the past, Iran has taken the negotiated time and just kept moving forward with its nuclear programme. We cannot allow that to be the case."
Zarif admitted to difficulties in the negotiations, on hold since a round in April in Kazakhstan where Iran refused to curb some sensitive enrichment activities in exchange for a moderate relief of sanctions.
"The nuclear issue cannot be resolved in one session, as mistrust has been accumulated over years," he said.
"I am not pessimistic about the talks, but we need to see the good intentions and political will of the other side in action," he said.