Saudi Arabia and Iran have agreed to resume diplomatic ties and reopen embassies, they said in a joint statement carried by the Saudi state news agency SPA.
The agreement was reached after talks in Beijing between top security officials from the two countries.
Tehran and Riyadh agreed "to resume diplomatic relations between them and re-open their embassies and missions within a period not exceeding two months", according to a statement issued by Iran, Saudi Arabia and China.
"The agreement includes their affirmation of the respect for the sovereignty of states and the non-interference in internal affairs."
They also agreed to activate a security cooperation agreement signed in 2001, as well as another earlier accord on trade, economy and investment.
Both countries thanked China, as well as Iraq and Oman for hosting earlier talks in 2021 and 2022.
The agreement was signed by Iran's top security official, Ali Shamkhani, and Saudi Arabia's national security adviser Musaed bin Mohammed Al-Aiban.
US President Donald Trump denied on Friday that the United States has made major concessions to Iran and a senior US official called an emerging pact "performance-based" with Tehran getting no frozen assets until its part of the agreement is fulfilled.
Hopes grew on Friday for peace between Iran and the US after President Donald Trump said a deal could be signed as soon as this weekend, even as Tehran said it had not made a final decision on a pact.
Families of the 260 people killed when an Air India Boeing 787 crashed in Ahmedabad a year ago gathered on Friday for prayers and a candlelight tribute to mark the anniversary of the disaster.
Two Ebola-related deaths have been confirmed in a displacement camp in eastern Congo, the UN refugee agency said, with aid workers warning the risk of the disease spreading quickly in crowded refugee sites was high and worrying.
Ukraine and Russia exchanged overnight drone strikes into early Friday, with Ukraine targeting a major oil processing and petrochemical region while Russia attacked railway stations and electrical substations.
Authorities in Afghanistan's western city of Herat arrested at least 30 women, accusing them of violating dress rules imposed by the Taliban government, the UN agency for women's rights said, but added that some were later released.
US President Donald Trump called off plans for renewed military strikes on Iran at the last minute on Thursday, saying negotiations with Tehran had advanced to the highest levels of Iran's leadership and had been approved by a broad coalition of regional powers.
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