Saudi Arabia's Crown Prince Mohammed bin Salman received Pakistan's Prime Minister Imran Khan upon his arrival in Jeddah on Friday evening.
Saudi Minister of Commerce and Acting Minister of Information Dr Majed Al Qasabi and other officials were also present.
During his three-day visit to the kingdom, Mr Khan will perform umrah in Makkah and pilgrimage to the Prophet's Mosque in Madinah.
The prime minister will also meet the Secretary General of the Organisation of Islamic Co-operation, Dr Yousef Al Othaimeen, the Secretary General of the World Muslim League, Mohammad bin Abdulkarim Al Issa, and the Imams of the Two Holy Mosques.
Mr Khan is also expected to meet with members of the Pakistani community in Jeddah during his visit.
Prince Mohammed and Mr Khan held a series of talks at the royal court at Al Salam Palace in Jeddah to strengthen bilateral relations and sign an agreement to establish the Saudi-Pakistani Supreme Co-ordination Council.
"We appreciate the kingdom's efforts in organising the Hajj season for the past year, despite the challenges caused by the pandemic and what it does to serve the Two Holy Mosques and their pilgrims," said Mr Khan.
"We welcome the initiative of the Crown Prince, 'Green Saudi Arabia and the Green Middle East' which expresses the leadership role of the kingdom towards common international issues."
Prince Mohammed and Mr Khan discussed ways to strengthen and enhance economic and trade relations between the two countries by exploring areas of investment and opportunities presented by the kingdom's Vision 2030.
“We welcome the Pakistani prime minister’s initiative, ‘Pakistan Clean and Green’, as well as the successful ‘Ten Billion Tsunami Trees’ initiative,” said Prince Mohammed.
Prince Mohammed and Mr Khan discussed the need for co-operation in the Islamic world to confront extremism and violence, reject sectarianism and to achieve international peace and security.
Two agreements and two memorandums of understanding were signed to finance projects in the energy, infrastructure, transportation, water and communications sectors.
The nations also signed agreements to co-operate in the fields of crime and the judiciary.
Another MoU was signed in the area of anti-drug trafficking, including psychotropic substances and chemical precursors.
Saudi Arabia’s King Salman approved construction of the King Salman project at the International Islamic University in Pakistan's capital Islamabad, with a capacity of 12,000 people.
The project includes a cultural centre, library, mosque, museum and a conference hall named after Crown Prince Mohammed bin Salman.
"The prime minister of Pakistan's visit to Saudi Arabia is an important milestone in bilateral relations," Saudi Foreign Minister Prince Faisal bin Farhan tweeted on Saturday.
"The kingdom is keen to further strengthen relations between the brotherly countries as well as enable broader economic cooperation."
A statement released by Pakistan said the talks between Mr Khan and Crown Prince Mohammed "were marked by exceptional cordiality and a commitment to fortify the upward trajectory in the bilateral relationship".
Pakistani army chief Gen Qamar Javed Bajwa met Crown Prince Mohammed after arriving in Saudi Arabia earlier on Friday, Pakistan's military said.
"During the meeting, matters of mutual interest, regional security situation including recent developments in Afghan peace process, bilateral defence, security, collaboration for regional peace and connectivity were discussed," the military said.
Saudi Arabia gave Pakistan a $3 billion loan and a $3.2 billion oil credit facility after Mr Khan's government came to power in 2018.
Saudi Arabia was the first foreign country Mr Khan visited after his election and he has visited the kingdom five times since, most recently in December 2019.