Israel and the UAE have already signed several commercial deals since mid-August, when they first announced they would establish full relations.
Israel and the United Arab Emirates have agreed to reciprocal visa-free travel, making Emirati citizens the first in the Arab world to not require Israeli entry permits.
The deal was signed after the first ever official delegation from the UAE landed in Israel for a day of talks following an agreement to normalise ties signed at the White House last month.
Israeli Prime Minister Benjamin Netanyahu, wearing a mask as he greeted the UAE delegation at Ben Gurion airport near Tel Aviv, described the visit as "a glorious day for peace".
"Today, we are making history in a way that will stand for generations," the right-wing premier said of the Israeli-UAE accord, which has been angrily denounced by the Palestinians.
The two states signed four agreements on Monday, including one "exempting our nationals from visas", Netanyahu announced, arguing that free movement of people would offer benefits to the Israeli and Emirati economies.
This morning UAE prepares to send its first official delegation to Israel, led by HE Obaid Al Tayer and HE Abdulla Bin Touq, and accompanied by US Treasury Secretary Steven Mnuchin pic.twitter.com/V6o1v8QbuU— هند مانع العتيبة Hend Al Otaiba (@hend_mana) October 20, 2020
US delegations accompanying
The UAE and fellow Gulf state Bahrain in September became the first Arab states in a quarter of a century to sign deals to establish formal ties with Israel, a move that Washington and its allies have said would foster regional peace and stability but which has been rejected by the Palestinians.
"This is an historical moment for the UAE country and Israel and we are looking forward to salaam (peace) ... in the region," one of the pilots could be heard saying in a video posted on Twitter by US Middle East envoy Avi Berkowitz.
Berkowitz and US Treasury Secretary Steven Mnuchin are accompanying the Emirati delegation, which is being led by Economy Minister Abdullah bin Touq al Mari and Minister of State for Financial Affairs Obaid Humaid al-Tayer, according to a UAE foreign ministry spokeswoman.
The US officials had on Sunday joined an Israeli delegation to Bahrain for a signing ceremony to formalise ties.
'Historic' peace deal
The UAE and Israel signed a US-brokered deal to normalise ties at the White House on September 15, marking the first such deal with a Gulf nation.
Bahrain followed suit in a ceremony on Sunday, following a similar US-brokered agreement.
The Israeli parliament ratified the UAE deal last week.
The UAE and Bahrain are only the third and fourth Arab states to normalise ties with Israel, following Israel's 1979 peace deal with Egypt and a 1994 agreement with Jordan.
On Monday, the Emirati and Bahraini governments ratified the normalisation agreements with Israel, according to the two countries' state news agencies.