Both the chief ministers told reporters after the meeting here that the talks were held in a cordial atmosphere and with "give and take" approach.
During the meet, issues related to employees distribution and entrusting responsibilities to the chief secretaries of both the states, were discussed.
Earlier, Governor Narasimhan had brought Naidu and Rao together on the occasion 'At Home' hosted at the Raj Bhavan on Independence Day.
The Governor also had a closed door meeting with the two leaders and their senior officials, an attempt seen as a move by the governor to break the ice between the two chief ministers.
Speaking to reporters, Rao said the discussion was held on three key issues -- on legislature accommodation (sharing of legislature buildings), distribution of employees and sharing of state-level educational institutions.
"Issue of legislators' accommodation has been resolved. On distribution of employees, Kamalanathan committee has been set up. The committee is looking into distribution of 67,000 employees belonging to the state cadre, of which 22,000 vacancies are there. And only 45,000 employees are to be divided. We have told chief secretaries to sit and discuss the issue...they will sort out that problem," Chandrasekhar Rao said.
The Telangana Chief Minister termed the talks as "fruitful" and said they sought to move ahead with the same spirit of cooperation, because the two states are mutually dependent.
Telangana being a land locked state may need to get its imports from Machilipatnam port in Andhra Pradesh, Chandrasekhar Rao said.
On issue of educational institutes, he said, "Institutions will finally go to the state where they are presently located."
On the request of Telangana, Andhra Pradesh has agreed to conclude Budget session of its Assembly, beginning tomorrow, by September 7 to avoid clash with the Budget session of Telangana assembly, Rao said.
Meanwhile, Naidu described the talks between the two governments as a positive development.
"Bitterness has cropped up between the two sides. These discussions would reduce that. It is good for people. Give and take is needed. We need to move ahead in a spirit of cooperation. This meeting would help towards sorting out those issues," he said.
To a query, Rao said the next meeting between the two chief ministers would take place as per requirement and in a spirit of cordiality.
Naidu and Rao have been bitter political rivals for long, though Rao was a TDP leader and serious differences have cropped up between the two states over issues like sharing of power, water, admissions to engineering and other professional courses.