The two countries issued a joint statement on Monday evening, saying the decision was made following contacts between Iranian and Sudanese high-ranking officials in recent months and in line with their national interests.
The statement also says the two countries agreed to expand their friendly ties based on mutual respect to their sovereignty, equality, mutual interest and peaceful coexistence.
The two sides have agreed to deepen their ties in different areas that would serve the interests of both nations and would be conducive to regional stability, says the joint statement.
Iran and Sudan are expected to take necessary measures to reopen their embassies in the near future.
Sudan cut off diplomatic ties with Iran in 2016 following the storming of the Saudi Arabian embassy in Tehran.