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Saudi Arabia said it would open its airspace to all civilian airlines, in a decision welcomed by US President Joe Biden, who is due to visit the kingdom on Friday.
The General Authority of Civil Aviation said the kingdom's airspace was now open to all carriers that meet its requirements for overflights, in line with international conventions, which specify that there should be no discrimination between civil aircraft.
The decision will "complement the efforts aimed at consolidating the kingdom's position as a global hub connecting three continents and to enhance international air connectivity," the aviation authority said.
The decision includes Israeli aircraft and will pave the way for direct flights to and from Israel.
This means Muslims in Israel will now be able to fly to Saudi Arabia to perform Hajj.
By-passing Saudi Arabia's airspace had added to flight times and increased fuel burn on some services to and from Israel.
The White House welcomed the move, describing it as an overture to Israel.
"This decision paves the way for a more integrated, stable, and secure Middle East region, which is vital for the security and prosperity of the United States and the American people, and for the security and prosperity of Israel," US national security adviser Jake Sullivan said.
The opening of Saudi airspace was seen as a significant and achievable objective for the Biden administration during the president's continuing four-day trip to the region and the announcement came only hours before he was expected to fly from Tel Aviv to Jeddah.
"This decision is the result of the president’s persistent and principled diplomacy with Saudi Arabia over many months, culminating in his visit today,” Mr Sullivan said.
Mr Biden will be the first US president to make such a flight.
Saudi Arabia never established diplomatic relations with Israel, after the latter's founding in 1948.
Still, recent efforts, including a push by the Biden administration before the president's visit to the region that started on Wednesday, have opened the door for the gradual improvement of ties.