In a communique, they noted that a report from an "Eminent Persons Group" (EPG) set up at their last meeting to recommend reforms "provided a strong basis to revitalise the Commonwealth and its institutions".
But achieving consensus proved difficult among nations at vastly differing stages of development with a collective population of two billion people spanning the globe.
"We as leaders have taken some major reform decisions this week," said Australian Prime Minister Julia Gillard, the host.
"Some of the discussions have not been easy. Getting consensus in an organisation as diverse as the Commonwealth is never easy.
But we have achieved and agreed a lot.
"I believe we have made a major contribution to ensuring the Commonwealth is well positioned for the future," she added.
The EPG said an independent commissioner overseeing human rights, democracy and the rule of law was vital to reform the organisation, but agreement could not be reached.
Instead, leaders said