Eviatar Manor, Israel's ambassador in Geneva, led its delegation to the session, held as part of the UN Human Rights Council's examination of UN member states every four years.
"It was not an easy decision to make," Manor said in an opening statement to the talks.
"But Israel's unfair treatment must come to an end. I hope our appearance here today will go a long way to restore equality and fairness regarding Israel in Geneva, and I am confident our continued diplomatic engagement will eventually allow our return to full activity within the Council."
Some 76 countries signed up to speak during the half-day debate, with Palestine's ambassador Ibrahim Khraishi among the first. He thanked diplomats whose behind-the-scenes negotiations brought Israel back.
"I think Israel only understands the language of pressure," Khraishi said.
He called for Israel to withdraw from East Jerusalem and the West Bank, "as these are occupied Palestinian territories recognized as such by 33 states in the world last year."
"We would also like to see Israel release all Palestinian prisoners from Israeli prisons, because Israel has no justification for keeping them in Israeli prisons."
Switzerland said Israeli settlement-building continued in the West Bank including East Jerusalem "in spite of the fact it is illegal under international humanitarian law and has a grave impact on the... rights of the Palestinian population".
But Peter Mulrean of the United States, Israel's main ally, praised Israel for its "strong commitment and track record in upholding human rights, political freedoms and civil liberties."
Manor said the main challenge facing Israel was relations with the Palestinians, adding that the recent resumption of direct peace negotiations led by U.S. Secretary of State John Kerry was a welcome step.
A second group of Palestinian prisoners are being released later on Tuesday as a confidence-building measure, he said.
"All of them have blood on their hands; all of them have murdered Israelis. Their release, I believe, illustrates Israel's determination to reach an agreement with our Palestinian neighbors that will, once and for all, end the conflict."
The planned release of 26 Palestinians has provoked feuding within Israel's governing coalition, already under strain from the peace talks.
For Palestinians, who view settlements that Israel has erected on land captured in the 1967 Middle East war as obstacles to a state, brethren jailed by Israel are heroes in a fight for independence.
Shai Nitzan, deputy attorney general in Israel's ministry of justice, told the talks that Israel faced serious security threats, including "suicide terrorism, external hostility and indiscriminate armed attacks against its civilians".
He said Israel was taking steps to ease life for Palestinians in the West Bank. During Ramadan, for example, over a million Palestinians entered Israel, mainly in order to pray on the Temple Mount.
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