Turkey was a key backer of Azerbaijan during the conflict, which erupted in September and ended in a Russian-brokered ceasefire after six weeks of fighting and some 6,000 deaths.
The truce agreement saw Yerevan cede territories it had controlled for decades, including Shusha, which both Armenians and Azerbaijanis claim as a cradle of their culture.
The fortress town sits on cliffs around 15 kilometres (nine miles) from Karabakh's largest city Stepanakert and its fall to Azerbaijani forces in November marked the turning point of the war.
Erdoğan met his Azerbaijani counterpart in the city of Fuzuli, which was liberated by Azerbaijan during the war in Nagorno-Karabakh region late last year.
The two leaders later traveled to the Azerbaijani city of Shusha in the same car. Aliyev briefed Erdoğan about reconstruction in the city on the way.
Erdoğan was later welcomed with an official ceremony in Shusha by President Ilham Aliyev.
After a closed-door meeting, Erdoğan and Aliyev will attend a signing ceremony, hold a joint press conference and take a tour of the city.
Azerbaijani army liberated the cities of Fuzuli, Shusha and other surrounding villages from Armenian occupation during the clashes over Karabakh that started in late last September and continued for six weeks.
Erdoğan arrived early Tuesday in Azerbaijan's capital Baku to hold official talks with Aliyev.
During his visit, Erdoğan is also to deliver a speech to the Azerbaijani parliament and on Wednesday attend the Euro 2020 football match in Baku between Turkey and Wales.
Erdoğan was welcomed at Baku Heydar Aliyev International Airport by Deputy Prime Minister Yaqub Eyyubov, Deputy Foreign Minister Halef Halefov, Azerbaijan's Ambassador to Turkey Hazar Ibrahim and Turkey's Ambassador to Azerbaijan Cahit Bağcı.
He was accompanied by first lady Emine Erdoğan, National Defense Minister Hulusi Akar, Communications Director Fahrettin Altun, Presidential Spokesman Ibrahim Kalın, Justice and Development (AK) Party Spokesperson Ömer Çelik and the head of the Turkish delegation to the NATO Parliamentary Assembly Osman Aşkın Bak.
