Sweden officially recognises the State of Palestine, foreign minister Margot Wallström announced on October 30.
The country becomes the first EU member state to do so, although Hungary, Slovakia and Poland each took this step before joining the Union.
The declaration was widely expected. During his inaugural speech earlier in October, newly-elected Prime Minister Stefan Lofven said that it would come.
Palestinian President Mahmoud Abbas said he welcomed the announcement. Israel, however, has criticised the move.
Wallström made reference to Israeli-Swedish ties during her announcement.
“We hope that this will be received in a balanced and constructive way by Israel. We are hopeful that our excellent cooperation will continue,” she said.
Palestinians are seeking statehood in the Israeli-occupied West Bank and in Gaza, with East Jerusalem forming the capital.
In 2012, the United Nations General Assembly voted to give Palestinian officials access to UN agencies and approved the existing recognition of the state.
However, the European Union has yet to give its official support.