A high-level Saudi delegation is in the occupied West Bank for the first time since Israel captured the territory from Jordan in the 1967 war.
Hours after it arrived, Israel's tourism minister landed in Saudi Arabia for a UN event.
Haim Katz became the first Israeli minister to lead an official delegation to the Gulf country, his office said.
The landmark trips come after Saudi and Israeli leaders commented positively on efforts to establish diplomatic ties.
The US has recently been brokering complex negotiations between its two regional allies.
A deal between the powerful states would mark a dramatic shift in Middle Eastern politics and give a major foreign policy victory to US President Joe Biden.
On Tuesday morning, Saudi Arabia's first official envoy to the Palestinians, Nayef al-Sudairi, who is also ambassador to Jordan, drove into the West Bank via the Karama crossing for a two-day visit. Israel controls entry at the border and would have had to have authorised his arrival.
The Palestinian foreign ministry marked what it described as "a historic milestone" in relations with Riyadh.
The Saudi diplomat was met with fanfare in Ramallah, where the Palestinian Authority (PA) has its headquarters.
At the presidential compound, he reviewed the guard of honour that had lined up to greet him, while the Palestinian and Saudi national anthems played out.
He then presented his official credentials to the Palestinian President, Mahmoud Abbas, at a ceremony.
Speaking to journalists, Mr Sudairi tried to reassure Palestinians about developments. He referred to the rare interview which Saudi Crown Prince Mohammed bin Salman gave days ago to Fox News.
Prince Mohammed said "every day we get closer" to an agreement on normalisation between his country and Israel, while adding that the Palestinian issue was still a "very important" part of the talks.
"The interest of the crown prince in the Palestinian cause is not new. He is keen that the whole region and the world are stable and safe, because this reflects positively on all the people in the world," the ambassador said.
The visit of Haim Katz to Riyadh was not previously announced.
He is spending two days in Saudi Arabia attending the UN World Tourism Organization's World Tourism Day event.
"Tourism is a bridge between nations," Mr Katz's office quoted him as saying. "Partnership on tourism issues has the potential to bring hearts together and economic prosperity."
"I will work to create collaborations to promote tourism and Israel's foreign relations."
Last week at the UN General Assembly in New York, Israeli Prime Minister Benjamin Netanyahu said his country was "at the cusp" of a deal with Saudi Arabia, which he predicted would transform the Middle East.
However, US officials have cautioned that talks have a long way to go.
If an agreement is reached in the coming months, it is expected to include a defence agreement between Riyadh and Washington and help for a civilian nuclear programme for Saudi Arabia.
Both the US and Saudi Arabia would want to see significant progress made on the Palestinian question amid calls for a renewed peace process leading to the creation of an independent Palestinian state alongside Israel.
Direct peace talks between Israel and the Palestinians, brokered by the US, have been suspended since 2014.
Recently, tensions between the two sides have worsened amid rising violence, particularly in the West Bank.
President Abbas appeared to refer to the possibility of a Saudi-Israeli normalisation deal in his own speech at the UN General Assembly, saying that no new Middle East peace agreement could be achieved unless Palestinians were given full rights.
When he spoke in New York, the Saudi foreign minister also called for the goal of the two-state solution to be revived.
