"So far we are keen to continue the talks, our hopes have not yet faded away, we still believe that talks might lead to a fair solution," Aliyev said as he was sworn in for a second term in office.
However, he vowed never to give up Nagorno-Karabakh, saying Azerbaijan's army potential had been strengthened in the past five years.
"Azerbaijan's territorial integrity has never been and will not be a subject for negotiation. Neither today nor tomorrow, neither in five nor 10 years will Nagorno-Karabakh be granted independence," Aliyev said.
Nagorno-Karabakh, a region with a large Armenian population, declared independence from Azerbaijan in the early 1990s and has been a source of conflict ever since.
Russian President Dmitry Medvedev said earlier this week that he would soon discuss the issue with his Armenian and Azerbaijani counterparts in Moscow.
Aliyev, 46, was re-elected to office in the Oct. 15 presidential election, in which he won 88.73 percent of the vote.
He first took office in 2003, succeeding his father, late President Heydar Aliyev, who established the ruling party in 1992 and was elected president twice in 1993 and 1998.
In the last five years, Azerbaijan, located between the oil and gas rich Caspian Sea region and energy buyer Europe, has recorded soaring economic growth thanks to surging energy prices.