As new Secretary of State for Northern Ireland, he told the Social Democratic and Labour Party's annual conference in Belfast that the politicians may yet strike a deal which allows the peace process to move on.
But he also called on people at a local level to reach agreement among themselves, insisting he had no "smoke and mirrors" at his disposal.
He was speaking as the former US senator, George Mitchell, prepared to deliver a report on his nine-week review of the Good Friday Agreement.
"These talks might, just might, bring the compromise that secures a peaceful, democratic future for generations to come," Mr Mandelson said. "This is a crucial point in Northern Ireland's history. A few more days is a small price to pay. So give the politicians time. They know what is at stake."
Mr Mitchell has already briefed Tony Blair on his findings, along with US President Bill Clinton and Irish premier Bertie Ahern. But his conclusions are not known.
There is no sign at present that Ulster Unionists and Sinn Fein have resolved their dispute over devolution and paramilitary decommissioning.
Speaking yesterday, the Secretary of State insisted that any agreement must be reached by local people alone. The recent co-operation between republican and Unionist politicians, he said, had been encouraging.
"I say to you this is the only way there can be progress. Local politicians must make the key decisions together.
"I am not in the business of forcing decisions over local people's heads. I cannot impose a solution on Northern Ireland. I have no cards up my sleeve."
Mr Mandelson also praised the leaders of the pro-Agreement parties, including David Trimble, the Ulster Unionists' leader, and Gerry Adams, Sinn Fein President.Reuse content