Israeli Prime Minister Benjamin Netanyahu has apologized to Turkey for a deadly naval raid in 2010 and announced a full resumption of diplomatic ties with Turkey.
After the gesture, officials from both countries said diplomatic relations had been fully restored and that ambassadors would be reinstated.
The diplomatic breakthrough was facilitated by U.S. President Barack Obama at the end of his three-day visit to Israel.
A statement from Mr. Netanyahu's office said the agreement came during a telephone call Friday between the Israeli prime minister and his Turkish counterpart, Recep Tayyip Erdogan.
The statement said Mr. Netanyahu apologized to the Turkish people for the loss of life that occurred during the 2010 raid and that he expressed regret over the deterioration in bilateral relations between the two countries.
A statement from Mr. Erdogan's office said he accepted the apology. It also said an agreement had been reached on the issue of compensation in the naval raid.
Ties between Israel and Turkey have been strained since May 2010, when Israeli commandos raided the Mavi Marmara.
Mr. Obama said Friday at a press conference in Amman that he has been encouraging Israeli and Turkish officials to repair their damaged relations. During talks earlier with Mr. Netanyahu, Mr. Obama said the time seemed right to push for a breakthrough.
The ship was carrying humanitarian aid to the Gaza Strip in defiance of an Israeli blockade aimed at preventing weapons from reaching militants. A confrontation on the vessel led to the killing of nine Turkish activists and the wounding of several Israeli soldiers.