Bhutan's Prime Minister Lyonchen Jigmi Y. Thinley, the first to arrive for the two-day summit that opens in Colombo on Saturday, got a red-carpet welcome at Sri Lanka's international airport amid tight security.
The leaders attending the South Asian Association for Regional Cooperation (SAARC) summit were slated to discuss boosting economic ties.
But talks between the prime ministers of India and Pakistan -- the highest-level meeting in 15 months between the bickering neighbours who have fought three wars -- were expected to dominate proceedings.
The premiers' urgent talks on issues threatening a four-year-old peace process were expected to take place after the ceremonial SAARC summit opening.
It will be the first time Indian Premier Manmohan Singh and his Pakistani counterpart Yousuf Raza Gilani, who took office in March, have met.
Ties between New Delhi and Islamabad hit trouble after India blamed "elements" in Pakistan for the bombing of its Kabul embassy last month that killed at least 41 people.
The dialogue is in "a state where it hasn't been in the past four years because we face a situation where things have happened in the recent past which were unfortunate, which quite frankly has affected the future of the dialogue," India's foreign secretary, Shiv Shankar Menon, told reporters.
Earlier Friday, an Indian official who asked to remain unnamed said New Delhi has the "cleanest" evidence that Pakistan's spy agency, the ISI, was involved in the Kabul blast.
Afghanistan has already blamed the suicide bombing on Pakistan's intelligence agency -- a charge denied by Islamabad.
The perpetrators wanted "India out of Afghanistan," the Indian official said, adding Singh would raise the issue with Gilani during their talks.
India and Pakistan have traditionally competed for influence in Afghanistan and analysts say Islamabad resents its rival's growing influence in the war-torn country, where New Delhi is heavily involved in reconstruction efforts.
After the embassy attack, New Delhi said the peace talks with Islamabad were "under stress," but the unnamed Indian official said India wanted the dialogue to continue.
"We have to keep dealing with Pakistan," he said. "We have to draw a clear line of distinction between the Pakistan government and rogue intelligence agencies."
Singh will also convey to Gilani India's concerns over a spurt in frontier ceasefire violations and last weekend's blasts in the Indian commercial cities of Ahmedabad and Bangalore that claimed at least 50 lives.
India has not blamed Pakistan for the blasts, but Indian officials suspect the attacks were supported by Pakistan intelligence, according to local media.
Both countries claim the Himalayan region of Kashmir, the cause of two of their wars.
A separatist revolt against New Delhi's rule in Indian Kashmir has raged since 1989, but Islamabad denies India's claims it assists the Muslim rebels.
Pakistan, in turn, accuses India of fuelling sectarian violence on its soil.
Pakistani Foreign Minister Shah Mahmood Qureshi said here Thursday that the countries were not interested in blaming each other, and instead looked forward to normalising ties.
Other SAARC members also hope the summit will focus on food security, high oil costs and working on developing alternate energy sources and improving infrastructure in the world's poorest region, home to 1.5 billion people.
SAARC, founded in 1985 with the aim of deepening regional economic cooperation -- a goal stymied by tensions between India and Pakistan, groups Afghanistan, Bangladesh, Bhutan, India, The Maldives, Nepal, Pakistan and Sri Lanka.
Sri Lanka, gripped by a bloody ethnic civil war, has imposed unprecedented security for the summit, deploying nearly 20,000 police and troops in the capital, while continuing to pound separatist Tamil Tiger positions in the embattled north.