New Zealand Prime Minister John Key formally opened the Pacific Islands Forum (PIF) Wednesday, saying the summit was the key to unlocking the region's "unrealised potential".

Key welcomed delegates from the 16-nation grouping and a number of high-profile guests, including UN Secretary-General Ban Ki-moon, at a ceremony on the Auckland waterfront.

"The Forum has come a long way in 40 years, today it's a core institution of our region," he said.

"It's a way in which we harness development in the Pacific, advance regional cooperation in politics and economics, and represent our concerns to the rest of the world."

The issue of climate change, which has led to rising seas threatening low-lying Pacific nations, is expected to dominate the meeting.

While the formal opening was held Wednesday, extensive bilateral meetings have been taking place in Auckland for the past two days.