In a joint statement on Friday, the two countries stated their “readiness for normalisation” and that the countries are resuming full diplomatic ties.
Turkish Foreign Minister Mevlut Cavusoglu and his Dutch counterpart Stef Blok met on the sidelines of a NATO summit in Brussels last week.
“To that extent, the ministers agreed to reinstate ambassadors in Ankara and The Hague shortly,” the statement added.
The Dutch foreign minister also said in a letter to parliament that ambassadors for both sides would be reinstated.
He is expected to visit Turkey later this year.
The dispute started when the Netherlands blocked Turkey’s Family Minister Fatma Betul Sayan Kayar from entering the Turkish consulate in Rotterdam in March 2017.
The Dutch government also withdrew landing permission for Cavusoglu’s plane, as the two Turkish politicians sought to campaign to expatriate Turks ahead of Turkey’s April 2017 constitutional referendum in the Netherlands.
In response, Turkey summoned the Dutch envoy to Ankara in protest over the ban, while Turkey’s President Recep Tayyip Erdogan promised retaliation against Dutch diplomatic flights and called the Dutch government “Nazi remnants”.
The Netherlands is home to some 300,000 people of Turkish origin.