Nawaf Obaid, a security adviser, said on Wednesday the $12 billion border will take between five and six years to complete and will have electronic sensors to protect the oil-rich kingdom from external threats.
"The main issue is to seal the border on the Iraqi side since there has been almost no [Iraqi security] presence since the US invasion," Obaid said.
The project reflects growing alarm in Saudi Arabia over the situation in Iraq where US forces are struggling to prevent sectarian violence from escalating into a civil war.
Since 2004, Saudi Arabia has spent about $1.8 billion to shore up its defences along the border with Iraq.
US and Iraqi officials have complained about Saudis crossing into Iraq - mostly through Syria - to join the fight against US-led forces.
In addition, the Saudis want to prevent drug-smugglers, weapons-dealers and illegal migrants from using Iraq as an avenue into the country, said Obaid.
Brigadier-General Abdul-Karim Khalaf, the spokesman for Iraq's interior ministry, said officials had heard of the plans to improve border security and added "we thanked them for it".
"If the Saudis want to build border defences to stop the infiltration of terrorists, they can do that to protect their borders," he said.
US officials said last April that Saudis were among the top five nationalities among foreign fighters captured by US-led forces in Iraq.
Between September 2005 and April, security forces arrested 23 Saudis in Iraq, compared with 51 Syrians and 38 Egyptians, US officials said earlier this year.