The 115 cardinal electors entered the conclave in the Sistine's Renaissance splendour on Tuesday and held their first inconclusive ballot that evening.
Black smoke emerged again on Wednesday after the cardinals held two morning ballots. Before returning to the conclave they had prayed for inspiration from God to choose a leader who can lead the Church out of scandal and internal strife.
Two more sessions will be held on Wednesday afternoon under a schedule that sees four votes each day. When the new pontiff is elected, white smoke will billow from the makeshift chimney above the chapel and the bells of St Peter's Basilica will ring.
The black smoke on Wednesday caused disappointment among excited crowds braving incessant rain in St Peter's Square, but few had expected a decision so soon after the conclave began.
"You can't expect a microwave pope. It's a process. These men are trying carefully to work out who should be the next to lead them. I am kind of happy it wasn't white smoke because I just showed up," 34-year-old American artist and missionary Adrian Britton told Reuters in the sprawling square.
"I am a bit disappointed because we wanted to see the white smoke, and we're only here for one more day," said 25-year-old Austrian student Daniela Weber as she stood among the hundreds of spectators sheltering under umbrellas.
The cardinals face a tough task in finding a leader capable of facing scandals over priestly child abuse and a leak of secret papal documents that uncovered corruption and rivalry inside the Church government or Curia.
The wave of problems are thought to have contributed to Pope Benedict's decision in February to become the first pontiff in 600 years to resign.
With several leading candidates, or "papabili", the cardinals are expected to need several ballots to reach a decision on who will lead the world's 1.2 billion Roman Catholics, with many experts predicting white smoke on Thursday.
New Pope on Thursday?
"A new pope by tomorrow," was the headline in Wednesday's La Stampa newspaper after days of feverish speculation about the most likely new pontiff in Italian media.
Only one man since the start of the 20th century, Pius XII in 1939, was elected within three ballots, with seven ballots on average required over the last nine conclaves. Benedict was clear frontrunner in 2005 and elected after only four ballots.
Pilgrims and tourists began arriving in St. Peter's Square early in the morning, hoping to get a glimpse of history by spotting white smoke.
"It's a wonderful time, a historical moment," said Monsignor Ronny Jenkins, General Secretary of the US Conference of Catholic Bishops.
"It's very unique. It's an incredible moment, but we want the rain to go away," he added with a laugh.
The cardinals were shut inside for the secret election under Michelangelo's luminous frescoes in the chapel late on Tuesday after a day of religious pomp and prayer to prepare for the task.
The initial inconclusive vote about two hours later was seen as a way of filtering the choice down to frontrunners for discussions among the supporters of the various papabili or possible popes in the following days.
No hint is expected to emerge before the pope is chosen. The Vatican has taken precautions, including electronic jamming devices, to prevent any leaks from inside the conclave.
The new pope will take up a burden that Benedict declared in February was beyond his physical capabilities.
Apart from an extensive global child abuse scandal and the "Vatileaks" case the Church has been shaken by rivalry from other churches, the advance of secularism, especially in its European heartland, and problems in the running of the Vatican bank.
The former head of the Archdiocese of Los Angeles, Cardinal Roger Mahony, is attending the conclave despite calls for him to stay away because of a sex abuse case that led to his censure by his successor Archbishop Jose Gomez in January. He was stripped of all public and administrative duties as punishment.
On Tuesday, lawyers for the victims in four sex abuse cases said the diocese, Mahony and an ex-priest had agreed to pay nearly $10 million to settle. Mahony was accused of helping a confessed paedophile priest escape prosecution.
Frontrunners at the conclave include Italy's Angelo Scola - who would return the papacy to traditional Italian hands after 35 years of the German Benedict XVI and Polish John Paul II - and Brazilian Odilo Scherer - who would be the first non-European pope since Syrian-born Gregory III, nearly 1,300 years ago.
In preparatory meetings before the conclave, the cardinals seemed divided between those who believe the new pontiff must be a strong manager to get the dysfunctional bureaucracy under control and others who are looking more for a proven pastoral figure to revitalise their faith across the globe.
Milan Archbishop Scola, who has managed two big Italian dioceses without being part of the Vatican's central administration, could be well-placed to understand the Curia's Byzantine politics and introduce swift reform.
Scherer is said to be the Curia's favoured candidate and would satisfy those who want a non-European, reflecting the future of a Church shifting towards the developing world.
A host of other candidates from numerous nations have also been mentioned as potential popes - including US cardinals Timothy Dolan and Sean O'Malley, Canada's Marc Ouellet and Argentina's Leonardo Sandri.
All the prelates meeting in the Sistine Chapel were appointed by either Benedict XVI or John Paul II, and the next pontiff will almost certainly pursue their fierce defence of traditional moral teachings.
When not voting in the Sistine chapel, the cardinals are staying in a Vatican guesthouse, where more elaborate precautions have been taken to avoid leaks.