"We consider today an important day in the relations of the Islamic Republic of Iran and the Kingdom of Saudi Arabia," Iranian Deputy Foreign Minister Alireza Bigdeli told a flag-raising ceremony.
"The cooperation between the countries is entering a new era," he added.
The reopening of the embassy will facilitate travel between Iran and Saudi Arabia, as they have been trying to reinstate direct flights, boost trade, and rebuild business connections.
While Saudi Arabia has not yet reopened its embassy in Tehran, the restoration of diplomatic relations will enable Iranian pilgrims to more easily apply for Saudi visas for the upcoming Hajj pilgrimage.
Iranian Foreign Ministry Spokesman Nasser Kanaani said on Monday that Iranian diplomats had already started helping Iranian pilgrims for Hajj. He said Iran's consulate will also reopen in the Saudi port city of Jeddah this week.
On March 10, after several days of intensive negotiations hosted by China, Iran and Saudi Arabia agreed to restore diplomatic ties and reopen embassies seven years after their relations were severed.
In a joint statement after signing the agreement, Tehran and Riyadh highlighted the need to respect each other’s national sovereignty and refrain from interfering in the internal affairs of one another.
They agreed to implement a security cooperation agreement signed in April 2001 and another accord reached in May 1998 to boost economic, commercial, investment, technical, scientific, cultural, sports, and youth affairs cooperation.
Last month, Iran appointed Alireza Enayati as the Iranian envoy to Riyadh. Enayati had previously served as Iran’s ambassador to Kuwait, assistant to the foreign minister and director-general of Persian Gulf affairs at the Foreign Ministry.
On May 11, Iran's Foreign Minister Hossein Amir Abdollahian announced that Saudi Arabia had appointed a new ambassador to Tehran, in line with the China-brokered March agreement between the two countries to revive relations.