The leaders of the world's eight top industrial democracies called the current tensions in Gaza "unsustainable, while urging Iran to do more to respect human rights.
The G8 said that it "deeply regretted" the loss of life that occurred when Israeli commandos raided an aid flotilla off Gaza in May, killing killed nine pro-Palestinian activists, and welcomed Israel's decision to set up an independent public commission to investigate the events.
The G8 welcomed Israel's decision to relax certain elements of its blockade on Hamas-controlled Gaza, saying "current arrangements are not sustainable and must be changed."
On Iran, the G8 repeated a call made at their summit last year for Tehran's leaders to respect the rule of law. At that time government forces were cracking down on street protests in favor of the opposition after a disputed election.
"We expect the government of Iran to respect the rule of law and freedom of expression as outlined in the international treaties to which Iran is a party," the draft communiqué said.
However, the joint statement issued by the so-called Group of Eight powers did not go as far as some nations, including the United States, had wanted. The statement came at the end of a meeting in Canada of the eight powers and before a larger group of 20 nations convenes that also includes fast-growing economies like China and India.
In a draft statement, the G8 countries - the US, Britain, France, Germany, Italy, Canada, Japan and Russia - condemned the alleged sinking by North Korea of a South Korean warship. The nations are also sketching out a five-year exit strategy from Afghanistan.
In a draft communiqué seen by Reuters at their summit in Huntsville north of Ontario, the G8 also asked Afghanistan's government to be ready by a July conference in Kabul to show its allies it is making tangible progress on assuming greater security responsibility.
The leaders turned to foreign policy matters after finding themselves at odds over how to continue to spur world economic growth in the aftermath of the worst recession since the 1930s. But the countries are divided over whether to continue government stimulus spending, as the United States wants, or to cut mushrooming deficits, as Europe and Japan want.
AP and Reuters contributed to the story