"We should leave him the benefit of the doubt," the Saudi prince said on Monday during a panel discussion at the Arab and World Media Conference organised by the Arab Thought Foundation in Dubai.
"There are many doubts about Sharon. He was a criminal ... (but) if he changes, I welcome that. Any person who can create peace between Israel and Arabs is welcome."
Al-Walid said there was "no difference" between the Sabra and Shatila massacres during the 1982 Israeli invasion of Lebanon when Sharon was defence minister and the 11 September terror attacks.
"There is no difference," he said, as both represent "the killing of innocent people".
But Al-Walid urged Sharon, who has left the right-wing Likud party and formed an alliance with Shimon Peres, the former Labour prime minister, to follow up on his Gaza withdrawal with a pullout from the West Bank.
He hoped that "Sharon and Peres can duplicate and repeat in the West Bank what happened in Gaza".
Al-Walid criticised US policy in Iraq.
"Any person who can create peace between Israel and Arabs is welcome"
Saudi Prince Al-Walid bin Talal
"The US missunderstood the whole thing," he said. "I think the US does not understand Iraq." He said that "in the short term the US cannot leave, they can only leave when Iraq is ready".
Al-Walid was also critical of the US media which he said was "in general ... pro-Israel", while the Arabs were not pro-active enough.
During the recent street protests in France, Fox, the US television channel owned by Rupert Murdoch and in which Al-Walid has shares, ran a banner reading "Muslim riots."
"I picked up the phone and called Murdoch ... (and told him) these are not Muslim riots, these are riots out of poverty," he said.
"Within 30 minutes, the title was changed from Muslim riots to civil riots."