The United Arab Emirates said its ambassador to Tehran would resume duties within days, six years after ties were downgraded in support of Saudi Arabia.
Ambassador Saif Mohammed al-Zaabi "will resume his duties at the UAE embassy in the Islamic republic of Iran in the coming days to contribute to further advancing bilateral relations", the Emirati foreign ministry said in a statement.
The move seeks to "achieve the common interests of the two countries and the wider region", it added.
With Middle East political alignments shifting, UAE presidential adviser Anwar Gargash in mid-July called for an easing of regional tensions and signalled the ambassador's possible return.
The UAE scaled back its ties with the Islamic republic in 2016, in solidarity with Saudi Arabia, after Iranian protesters attacked the kingdom's diplomatic missions in Iran following Riyadh's execution of Shiite Muslim cleric Nimr al-Nimr.
In July, the Emirati and Iranian foreign ministers held a telephone conversation and discussed boosting ties, UAE state media reported at the time.
The oil-rich UAE has previously said that Arab Gulf states should take part in "collective diplomacy" to reach an agreement with Iran, which has been in talks with Western powers on reviving a 2015 nuclear deal.
In 2020, the UAE established diplomatic relations with Israel, a move which Tehran condemned. But Abu Dhabi has been pursuing a policy of rapprochement with former regional rivals including Qatar and Turkey as well as Iran, with which it had maintained strong economic ties despite the diplomatic downgrade.
