Representatives from 40 countries will attend the event, aimed at devising(设计,想出) a common approach to a country blighted by years of civil war and famine.
The leaders are expected to agree money for schools, hospitals and the police.
The UK has described Somalia as the "world's worst failed state" but said it needs a "second chance".
Somali Prime Minister Abdiweli Mohamed Ali, among a number of senior government figures attending the event, has warned the country is at a "critical juncture" and needs more international help.
US Secretary of State Hilary Clinton, Nigerian President Goodluck Jonathan, Ethiopian leader Meles Zenawi and UN secretary general Ban Ki-moon are among the leaders due to join the discussions.
On Wednesday, the UN Security Council approved a resolution increasing the number of African Union (AU) troops in Somalia by 5,000 to more than 17,000. Council members also agreed to extra funding for the mission and to extend its mandate.
'Realistic'
At the same time, Ethiopian and Somali troops took a strategic stronghold in the south-west of the country held by militant group al-Shabab, which controls parts of the country and recently merged with al-Qaeda.
Islamist insurgents who have been fighting the internationally recognised government since 2007 have said the London conference was "another attempt" to colonise Somalia.
The UK says its increased focus on the country is justified as the activities of militant groups and pirates operating off the coast of Somalia pose a direct threat to British interests in the region and to both regional and global security.
Naval ships from the UK and other countries around the world have been sent to patrol the Indian Ocean off the Somali coast to deter pirate attacks.
They have foiled a number of kidnapping attempts in recent months but attacks continue - and have been staged further from the shore.
The UK has also said it cannot rule out sending more military advisers to boost its small team currently assisting Ugandan forces part of the AU mission.
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