Obama will also meet separately on September 1 with Egyptian President Hosni Mubarak and Jordan's King Abdullah II, Arab mediators whose states have signed peace treaties with Israel and who, Clinton said, play a "critical role."
Backed by a diplomatic quartet of world powers, the parties will "relaunch direct negotiations to resolve all final status issues, which we believe can be completed within one year," Clinton announced at the State Department.
She was referring to security for Israel, borders of a future Palestinian state, the future of Palestinian refugees, and the fate of Jerusalem, which both sides claim as their capital.
Clinton stressed the "continued leadership and commitment to peace" of both Mubarak and King Abdullah "will be essential to our success."
Clinton said she and Obama, as well as Netanyahu and Abbas, shared "the goal of two states, Israel and Palestine, living side by side in peace and security."
The White House said it was "very hopeful" about the peace talks, while in London, Britain's Foreign Secretary William Hague called them a "courageous step" towards peace in the region.
"Urgent progress must now be made. We call on all parties to refrain from any activity that could undermine negotiations," Hague added in a statement.
The diplomatic Quartet -- the United States, Russia, the United Nations and the European Union -- reiterated past statements calling for an end to the Israeli occupation, which began in 1967.
The reference is important for the Palestinians, who want the borders of their future state along the boundaries that existed before Israel captured the West Bank, the Gaza Strip and east Jerusalem in 1967.
Clinton said the new round of negotiations "should take place without preconditions and be characterized by good faith and a commitment to their success, which will bring a better future to all of the people of the region."
The point appeared designed to appease the Israelis, who reject Palestinian calls for a complete freeze of Jewish settlements.
US Middle East envoy George Mitchell, who has shuttled between both sides for months, said the United States will be engaged in the peace talks, which he said could move at some point to the Middle East.
"We will be active and sustained partners, although we recognize that this is a bilateral negotiation, and we have indicated to both parties that, as necessary and appropriate, we will offer bridging proposals," Mitchell said.
He also said Hamas, which has for three years run the Gaza Strip since ousting Abbas's Palestinian Authority, would have no role in the peace talks.
Clinton added that Obama will also host a group dinner on September 1 with the four Middle East leaders and the Quartet representative, former British prime minister Tony Blair.
With the launch of the talks, Clinton warned "there will be difficulties ahead. Without a doubt, we will hit more obstacles. The enemies of peace will keep trying to defeat us and derail these talks.
"But I ask the parties to persevere, to keep moving forward even through difficult times, and to continue working to achieve a just and lasting peace in the region," she said, reading from a prepared statement.
The last round of direct talks collapsed when Israel launched a devastating three-week offensive in Gaza in December 2008 in a bid to halt rocket fire from the enclave ruled by the militant Hamas movement.
While Netanyahu has welcomed the invitation for the talks and Mitchell said both parties have agreed to them, a formal announcement was due later from the Palestinians.
The executive committee of the Palestine Liberation Organization was to meet in the West Bank city of Ramallah at 8:00 pm (1800 GMT), Palestinian negotiator Saeb Erakat told AFP.
"It is premature to announce a Palestinian position" before the gathering of the PLO's top executive body, he said.
Both Netanyahu and Abbas have visited Washington in recent months for talks with Obama, with the White House urging a speedy return to direct negotiations.
The two sides have accused each other of stymieing direct talks, but both parties agreed, albeit reluctantly, to indirect "proximity" talks that began in May, facilitated by Mitchell.