The government said it would begin licensing cinemas immediately and the first movie theatres are expected to open next March, in a decision that could boost the kingdom's nascent film industry.
Reviving cinemas would represent a paradigm shift in the kingdom, which is promoting entertainment as part of a sweeping reform plan for a post-oil era, despite opposition from conservatives who have long vilified movie theatres as vulgar and sinful.
"Commercial cinemas will be allowed to operate in the Kingdom as of early 2018, for the first time in more than 35 years," the culture and information ministry said in a statement.
"This marks a watershed moment in the development of the cultural economy in the kingdom," the statement quoted Information Minister Awwad Alawwad as saying.
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Like most public spaces in the kingdom, cinema halls are expected to be segregated by gender or have a separate section for families.
Hardliners, who see cinemas as a threat to cultural and religious identity, were instrumental in shutting them down in the 1980s.
Saudi Arabia's highest-ranking cleric warned in January of the "depravity" of cinemas, saying they would corrupt morals.
But authorities appear to be shrugging off the threat, with some comparing Saudi Arabia's reform drive to a fast-moving bus – either people get on board or risk being left behind.
'Open, moderate Islam'
Saudi Arabia in recent months has organised music concerts, a Comic-Con pop culture festival and a mixed-gender national day celebration that saw people dancing in the streets to thumping electronic music for the first time.
Saudis themselves appear quietly astounded by the torrid pace of change – including the historic decision allowing women to drive from next June.
The social transformation chimes with Crown Prince Mohammed bin Salman's recent pledge to return Saudi Arabia to an "open, moderate Islam" and destroy extremist ideologies.
Saudi filmmakers have long argued that a ban on cinemas does not make sense in the age of YouTube.
Saudi films have been making waves abroad, using the internet to circumvent distribution channels and sometimes the stern gaze of state censors.
"It is a beautiful day in #SaudiArabia! Saudi Arabia says cinemas to get licenses in early 2018," Saudi female director Haifaa al-Mansour wrote on Twitter.
Vying for an Oscar
Her film "Wadjda" made history in 2013 after it became Saudi Arabia's first Academy Award entry.
The film depicts the dream of a 10-year-old girl to get a bicycle just like the boys in her conservative neighbourhood.
This year, the country is again vying for an Oscar with the film "Barakah Meets Barakah", the kingdom's first romantic comedy which premiered at the Berlin International Film Festival.
"Now our young men and women will show the world possibilities and stories worth seeing," Saudi filmmaker Aymen Tarek Jamal said on Twitter.
"Congratulations to the 2030 Generation."
A royal decree was introduced this year permitting women to drive and being allowed into sports stadiums. The crown prince has also proclaimed that the country will return to "moderate, open Islam".
