Delegations of the two countries were to meet Monday in Ankara, Turkey.
Nine Turkish citizens were killed in the commando raid on the aid ship in May 2010.
The ship had sought to break the Israeli-imposed blockade on the Gaza Strip and refused Israel's request to dock at an Israeli port and transfer aid supplies by land to Gaza.
Israel hopes to convince Turkey to cease all legal procedures against Israeli soldiers and officers allegedly involved in the raid, Israeli and Turkish media reports said.
Turkey is demanding that Israel pay $1 million to each of the families of citizens killed in the raid while Israel is willing to pay $100,000, Haaretz reported.
The Turkish daily Today's Zaman said families of the victims harshly criticized the government for entering talks with Israel and objected to ceasing legal procedures against the commandos.
The Hurriyet Daily News said ties between the two countries have deteriorated since the Mavi Marmara incident.
Israeli Prime Minister Binyamin Netanyahu officially apologized for the raid at the request of U.S. President Barack Obama in March but Israel continues to refuse Turkey's request to lift the blockade imposed on the Gaza Strip, Haaretz said.
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