The U.S.-mediated talks follow three years of intense diplomacy by Washington and were announced less than a month after the United States stepped up pressure on political allies of the Iran-backed Lebanese group Hezbollah.
They also come after the United Arab Emirates and Bahrain agreed to establish full relations with Israel, under U.S.-brokered deals which realign some of Washington's closest Middle East allies against Iran.
Hezbollah, which fought a five-week conflict with Israel in 2006, says the talks are not a sign of peace-making with its long-time enemy. Israel's energy minister also said expectations for Wednesday's meeting should be realistic.
"We are not talking about negotiations for peace and normalization, rather an attempt to solve a technical, economic dispute that for 10 years has delayed the development of offshore natural resources," minister Yuval Steinitz tweeted.
Nevertheless, U.S. Secretary of State Mike Pompeo has described the decision to go ahead with the talks as historic, and said Washington looked forward to separate talks later over disagreements on the two countries' land border.
Wednesday's meeting will be hosted by the United Nations peacekeeping force UNIFIL, which has monitored the disputed land boundary since Israel's' military withdrawal from south Lebanon in 2000, ending a 22-year occupation.
A Lebanese security source says the two sides will meet together in the same room in UNIFIL's base in south Lebanon, but will direct their talks through a mediator.
Disagreement over the sea border had discouraged oil and gas exploration near the disputed line. That may be a minor irritation for Israel, which already pumps gas from huge offshore fields. For Lebanon, yet to find commercial reserves in its own waters, the issue is more pressing.
*This story has been edited by AhramOnline