Israel has apologised to Turkey for killing Turkish citizens in a 2010 naval raid on a Gaza-bound flotilla.
And in a surprise breakthrough announced by United States President Barack Obama, the countries have agreed to normalise relations.
The apology came in a telephone call between Israeli Prime Minister Benjamin Netanyahu and his Turkish counterpart Recip Tayyip Erdogan, which was facilitated by Mr Obama just as he ended his visit to Israel.
Mr Erdogan's office said he had accepted the apology, "in the name of the Turkish people".
In the past, he has always given two conditions for restoring bilateral relations with Israel - an apology and compensation for victims' families, the BBC reports.
Nine people were killed on board the Turkish aid ship, Mavi Marmara, when it was boarded by Israeli commandos while trying to transport aid supplies to Gaza in May 2010 in spite of an Israeli naval blockade.
The Israeli government admitted mistakes were made in intelligence-gathering and planning, but insisted its commandos used lethal force because activists had attacked them.
The activists said the troops had opened fire as soon as they boarded the vessel, which was in international waters at the time.
The incident provoked an international outcry and led to a major deterioration in relations between Turkey and Israel.