Speaking at a joint press conference after the meeting, the two presidents reaffirmed their readiness to continue intensive cooperation and said that an agreement had been reached under which Croatia would be partly compensated for the war damage caused by Montenegrin forces during the 1991-1995 war.
Both presidents described their talks as friendly and useful.
Vujanovic thanked Mesic for his personal contribution to the promotion of relations between Croatia and Montenegro and wished Croatia a lot of success in its efforts to join the European Union and NATO.
Mesic said that bilateral relations between Croatia and Montenegro deserved praise and that there was the political will on either side to promote further development of cooperation in all areas. He reiterated that it was in Croatia's interests for the region to be stable.
"If we turn to European standards and objectives, we will help stabilise the situation in the entire region," Mesic said.
The Croatian president highlighted the importance of road construction, saying that Croatia would build a highway as far as the border with Montenegro by 2008 or 2009 and that the highway would be the fastest road to Europe for Montenegro.
Mesic also said that Croatia was interested in the continuation of construction of the Adriatic-Ionian Highway through Montenegro, Albania and Greece, noting that it would be of immense importance to the overall economic development of the region.
Mesic went on to say that he and Vujanovic had also discussed certain outstanding issues, including the return of war refugees. He stressed that Croatia advocated that all refugees should return to their homes, that their housing should be rebuilt and that they should be ensured safety and employment.
He said that an agreement had been reached for compensation of a portion of the war damage in Konavle and Dubrovnik's Cilipi airport. Vujanovic confirmed that Montenegro would pay the agreed compensation over the next month or two.
Responding to a question on the status of the Croatian national minority abroad, Mesic said that Croatia wanted to help ethnic Croats living outside Croatia, but that at the same time it wanted them to be loyal citizens of Montenegro.
Vujanovic announced passage of a law on national minorities under which the Croats would have their representatives in the Montenegrin parliament.
Vujanovic said he had informed his guest of the situation in Montenegro and its relations with Serbia.
"We expect that the authorities in Serbia will discuss our proposal to establish a union of independent states," the Montenegrin president said, adding that unless an agreement was reached Montenegro would hold a referendum on independence at the beginning of next year.
"An independent Montenegro will have good relations with Croatia and other countries in Southeast Europe, and we will also try to build substantial relations with Serbia," Vujanovic said.
Mesic said that Montenegro had a legitimate right to hold a referendum, just as citizens of Croatia had had in 1991.
Answering questions on the status of Kosovo, the two presidents agreed that the Kosovo issue should be resolved in consultations between Pristina and Belgrade with the assistance of the international community and that it was in no way connected with the independence referendum in Montenegro.
Mesic also met Montenegrin Premier Milo Djukanovic and Foreign Minister Miodrag Vlahovic. He will conclude his official visit to Montenegro with a meeting with representatives of the Croatian national minority in Tivat.