The meeting is aiming to lay the ground for a fully-fledged peace conference to be held by the end of the year but few believe that genuine progress will be made.
Neither Israel nor the Palestinians have been invited to the talks and Israel has angrily compared the French initiative to the 1916 Sykes-Picot agreement to draw up the region's borders.
And although US Secretary of State John Kerry is attending the conference, Washington has made it clear it believes little or nothing will be achieved.
Hollande said a solution would have to come from the Middle East region, but in the end it was up to the Israelis and Palestinians "to make the courageous choice of peace".
"The discussion on the conditions of a lasting agreement between Israelis and Palestinians must take into account the whole of the region," he told representatives of some 25 countries, as well as the United Nations, European Union and Arab League.
While scepticism over the new peace bid is high, the consensus among some diplomats appears to be that any effort is better than none at all.
After decades of failed negotiations, few believe the climate is right to bring together Israelis and Palestinians for another shot at solving one of the world's longest-running conflicts.
Direct negotiation "doesn't work," French Foreign Minister Jean-Marc Ayrault insisted Friday.
"Currently everything is blocked. We don't want to act in the place of the Israelis and Palestinians but we want to help them," he told France Info radio ahead of the conference.
One French diplomatic source told AFP that without a new drive to find peace, "we risk heading towards even more violence in an international context where there is no visible American effort on the case."
The United States, the traditional mediator in the conflict, has not moved the two sides towards a new peace process since talks collapsed in April 2014 and Washington has been decidedly cool on the French initiative.
"We're not bringing any specific proposals to this meeting tomorrow," a senior State Department official said.
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But senior Palestinian official Saeb Erekat said France's bid offered "a flicker of hope" for a resolution to the conflict.
In an opinion piece in the left-leaning Israeli newspaper Haaretz, Erekat said the Paris talks offered "a broader framework" than the moribund bilateral track.
"The French initiative is the flicker of hope Palestine has been waiting for and we are confident that it will provide a clear framework with defined parameters for the resumption of negotiations," the Palestine Liberation Organisation secretary general wrote.
Israel though is fiercely opposed to the French initiative.
Senior foreign ministry official Dore Gold said the talks would "completely fail", and that the Jewish state would prefer a Middle East-driven process backing direct talks between Israelis and Palestinians.
According to diplomatic sources, the French conference will seek to focus on a 2002 Saudi-led peace initiative.
Under that proposal, Arab leaders said they would recognise the state of Israel in exchange for an Israeli withdrawal from territories occupied since 1967, and the creation of a Palestinian state.
The plan was largely ignored by Israel at the time, but Prime Minister Benjamin Netanyahu said this week he would be open to re-negotiating aspects of it with the Palestinians.
'NEW OPPORTUNITY FOR PEACE'
"In a way, the French initiative has already had an impact, as it has forced Netanyahu to propose an alternative in the Arab Peace Initiative," a European diplomat in Israel told AFP.
"If the international community comes together and says the two-state solution is the only option, that is important in itself –- after years of people talking about the two-state solution being dead."
In recent years the conflict has fallen behind in diplomatic priorities as other Middle Eastern crises such as the Arab Spring and the war in Syria took precedence.
Analysts say this Palestinian frustration has driven a wave of violence which has left 206 Palestinians and 28 Israelis dead since October.
Israel blames incitement by Palestinian leaders and media for most of the violence.