The meeting came just two days after Home Minister Rajnath Singh's visit to Srinagar during which he met with Mehbooba, among others, as the Valley continued to remain on the boil and curfew continued for the 58th day.
Speaking to the media after the meeting she called for talks between interlocutors and all stakeholders on the Kashmir issue.
"Separatists should come forward and help J&K government in saving innocent lives," she said.
Mehbooba blamed Pakistan for openly trying to provoke and fuel tensions in the valley.
She said Pakistan missed a golden opportunity by not holding discussion with our HM Rajnath Singh during his SAARC visit to Islamabad.
"PM Modi has taken initiative, he went to Lahore. Our HM went to Islamabad. It is for Pakistan to take a step now," Mehbooba said.
This is the first meeting between the Prime Minister and Mehbooba after the unrest broke in the Valley on July 8.
Mehbooba has been under fire for failing to control the violence as the Centre has made it clear that law and order was a state subject.
Earlier this week, Modi had a meeting with a delegation of Opposition parties from the state led by former Chief Minister Omar Abdullah.
After that meeting, for the first time, Modi had expressed his "deep concern and pain" over the situation in the Valley and asked all political parties to work together to find a "permanent and lasting" solution to problems in the state.
He had also made an appeal for restoration of normalcy in the Valley and emphasised that there has to be a dialogue.
In his statement, the Prime Minister had appreciated the "constructive suggestions" made by the Opposition delegation during the talks and reiterated his government's commitment to the welfare of people.
Mehbooba had strongly defended security forces action on Thursday during a press conference and had said "People came on streets, we imposed curfew. Did the children go to army camps to buy toffees (candy)? Was the 15-year-old boy, who attacked the police station at Damhal Hanjipora (in south Kashmir), going there to get milk..."
She had said "Today 95 per cent who have been killed are youngsters belonging to poor families. They were killed in retaliation for attacking security camps... The situations of 2010 and present cannot be compared."
She claimed that 95 per cent of people want to resolve the Kashmir issue through political means and dialogue but five per cent people were resorting to agitation.