Eritrea's President Isaias Afwerki is visiting Ethiopia for the first time since the start of the two countries' border war in 1998.
The visit aims to cement ties just days after the two neighbours declared their "state of war" over.
A peace deal ending the 1998-2000 border conflict had never been fully implemented and there has been tension between the neighbours ever since.
The countries have also agreed to re-establish trade and diplomatic ties.
Mr Afwerki's visit is the latest in a string of moves towards reconciliation between Africa's erstwhile bitter enemies.
Since taking office in April, Ethiopia's Prime Minister Abiy Ahmed has announced a series of reforms, and spoken of mending ties with Eritrea.
Days ago, Mr Abiy visited Eritrea's capital, signing a pact that declared an end to their "state of war".
Why is this such a big deal?
The two countries have been in a state of "no war, no peace" since 2000, when a peace deal ended a war in which tens of thousands of people were killed.
A border commission set up under the peace agreement ruled that the town of Badme, the flashpoint for the conflict, was part of Eritrea but Ethiopia refused to accept this and so normal relations were never resumed.
The rivalry affected the whole region with each country normally taking opposite positions whatever the question. They also took rival sides in Somalia's long conflict - Eritrea was accused of backing Islamist groups, while Ethiopia, a US ally, supported the internationally recognised government.
Until now, Eritrea has always said that war could resume at any time and so had national conscription, which could last indefinitely. This is one of the main reasons why so many Eritreans try to leave the country and seek asylum in Europe.
President Afwerki's visit is a remarkable turnaround for the 72-year-old independence leader who has been isolated diplomatically and seen as secretive and paranoid.
Why is this happening now?
Since Abiy Ahmed took over as prime minister of Ethiopia three months ago, he has introduced a raft of changes.
As well as his overtures to Eritrea, Mr Abiy has lifted a state of emergency, freed political prisoners and announced economic reforms.
He inherited a country that has seen some of the fastest economic growth in the world in recent years, but has also been riven by years of protests by people who feel marginalised.
The previous government was accused by many of human rights violations - including torture and extrajudicial killing of political dissidents.
Mr Abiy is the country's first Oromo leader - the ethnic group at the centre of nearly three years of anti-government protests, which have left hundreds of people dead.
What will change?
The two leaders said the countries would improve political, economic and diplomatic ties.
Transport and telephone links will also be re-established. The first flights between the two countries in two decades are expected next week.
For the last 20 years, it has been impossible to travel directly from one nation to the other. There have been no flights, the land border was closed, and telephone lines did not work.
This raises the possibility that families who have been divided by the conflict could finally be reunited.
Family members divided by the dispute are now able to telephone each other for the first time since the war.