"A few days ago I called upon their leader, Mullah Omar, and said 'My brother, my dear, come back to your homeland, come and work for the peace and good of your people and stop killing your brothers'," Karzai told reporters on Tuesday.
Karzai denied reports that negotiations with the Taliban had taken place in Saudi Arabia but said he had written to the Saudi king to ask him to help bring peace to Afghanistan and the region.
Saudi Arabia was one of the few countries to recognise a Taliban government when they ruled most of Afghanistan in the 1990s. The hardline Islamists were ousted in late 2001.
"There have been no negotiations in Saudi Arabia. If any negotiations take place, it will be in our own land," Karzai said after prayers on the first day of celebrations following the fasting month of Ramadan.
Karzai is an ethnic Pashtun, the country's biggest ethnic group that includes Mullah Omar and most members of the Taliban.
Karzai also said he would assure the protection of Mullah Omar and other Taliban members who wished to make peace with international forces in Afghanistan.
"They should come back and not be afraid of the foreigners. I will stand in front of the foreigners," said Karzai.