Saudi women will have the right to join the advisory Shura Council (consultative assembly) as full members and participate in future municipal elections, King Abdullah has said.
The announcement came days before municipal elections where women will be excluded.
"Because we refuse to marginalise women in society in all roles that comply with sharia, we have decided, after deliberation with our senior ulama [clerics] and others ... to involve women in the Shura Council as members, starting from the next term," Abdullah said on Sunday in a speech delivered to the Shura Council.
"Women will be able to run as candidates in the municipal election and will even have a right to vote," Abdullah said.
The decision means women will take part in the elections to be held in four years. Nominations for municipal polls on Thursday are already in.
Women in the ultra-conservative Gulf kingdom are not allowed to drive.
Activists in the country have long called for greater rights for women, who are barred from travelling, working or having medical operations without the permission of a male relative.
More than 5,000 men will compete in Thursday's municipal elections, only the second in Saudi Arabia's history, to fill half the seats in the kingdom's 285 municipal councils. The other half are appointed by the government.
The first elections were held in 2005, but the government extended the existing councils' term for two more years.
More than 60 Saudi intellectuals and activists have called for a boycott of the ballot for excluding women.