The foreign ministers of Morocco and Israel signed three accords on Wednesday during the first visit by a top official from the Jewish state since ties were normalised last year.
Nasser Bourita and his Israeli counterpart Yair Lapid signed agreements on political consultations, aviation and culture.
Lapid told reporters the accords would "bring our countries innovation and opportunities for the benefit of our children -- and their children -- for years to come".
Israel and Morocco struck a deal last year after then US president Donald Trump recognised Morocco's contested sovereignty in Western Sahara.
"Today, we are restoring peace, restoring friendship," Lapid said.
Morocco was the fourth Arab state to establish ties with Israel last year after the United Arab Emirates, Bahrain and Sudan.
The move infuriated the Palestinians, as it shattered the longstanding Arab consensus that there should be no normalisation until Israel agrees to a comprehensive and lasting peace.
Bourita said that during his talks with Lapid, the situation in Israel and the Palestinian territories was raised.
"King Mohammed VI insists on the need to break the current impasse and resume negotiations, as the only means of reaching a solution based on two states living side by side on the 1967 borders," Bourita said.
The monarch had reassured Palestinian president Mahmud Abbas after the normalisation of ties that Morocco would continue to support the Palestinian cause.
"It is urgent that measures be taken today to restore confidence and maintain calm, to open a political horizon to the Israeli-Palestinian conflict," Bourita said.
Lapid said he preferred to focus on the normalisation of ties between Israel and Arab countries.
"Something is happening in the region," he said.
On Thursday, Lapid will officially open Israel's diplomatic representation in the capital Rabat.
- 'A major step' -
US Secretary of State Antony Blinken called Lapid's visit "significant for Israel, Morocco, and the broader region".
"The United States will continue to work with Israel and Morocco to strengthen all aspects of our partnerships and create a more peaceful, secure, and prosperous future for all the people of the Middle East," Blinken said in a statement.
The American embassy in Rabat said that ties between the two countries generated "real benefits" for both sides including direct commercial flights and economic cooperation.
Before the Bourita-Lapid meeting, the Israeli delegation visited the royal mausoleum, where kings Hassan II and Mohammed V are buried.
Lapid is also expected to visit the Beth-El synagogue in Casablanca on his two-day visit, the Israeli foreign ministry said.
"Proud to represent Israel during this historic visit," Lapid wrote on Twitter, just after his flight operated by Israeli national airline El Al landed.
His visit comes a little over two weeks after direct flights were launched between Israel and Morocco.
Since then, the first Israeli tourists have flooded into Morocco's tourist magnet Marrakesh, and into Casablanca.
Before the pandemic, between 50,000 and 70,000 Israeli tourists -- mainly of Moroccan origin -- had visited annually, albeit by transiting through third countries.
- Large Jewish community -
The North African country hosts the Arab world's largest Jewish community of some 3,000 people.
They are the remnant of a once much larger community. Some 700,000 Jews of Moroccan descent now live in Israel.
Morocco and Israel maintained liaison offices in the 1990s, before closing them during the second Palestinian intifada, or uprising, that raged from 2000 to 2005.
Lapid's visit to Rabat follows a June trip to the United Arab Emirates, where he inaugurated the new Israeli embassy in Abu Dhabi.
It comes just days before Israel is due to require all travellers returning from Morocco to quarantine following a review of the risks of Covid-19 infection.
Last December Israel and Morocco signed agreements on water, aviation and finance, when a delegation of Israeli officials arrived on a first direct flight between Rabat and Tel Aviv.
And in July, the two countries signed a cyber defence cooperation accord in Rabat.
Lapid's trip comes after rights groups last month accused Morocco of having used the Israeli spyware programme Pegasus.
Rabat strongly denied the reports and said it was suing the rights groups.