The kingdom was the only the country in the world to bar women from driving and for years had garnered negative publicity internationally for detaining women who defied the ban.
Lifting the driving ban is part of a broader reform underway in Saudi Arabia led by Crown Prince Mohammed bin Salman.
This landmark decision follows King Salman's May 2017 decree, which overturned another oppressive rule and forbade Saudi government agencies from requiring a male guardian's consent for women seeking services such as education and healthcare.
Wahey! Women in Saudi Arabia are now allowed to drive for the first time ever.
Women in Saudi Arabia are ready to get behind the wheel. Recent months have seen live concert performances in Riyadh - albeit to male-only audiences - while the powers of the once-omnipresent religious police have been curtailed.
A ministerial body will be set up to give advice and the royal order will be implemented by 24 June, 2018.
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This decision by King Salman is a big step for the Women2Drive campaign in Saudi Arabia, who have been arguing for years to get this law changed.
The US State Department called it a "great step in the right direction", echoing a similar comment from UN Secretary General Antonio Guterres.
Ultra-conservative Saudi Arabia has some of the world's tightest restrictions on women, despite ambitious government reforms aimed at boosting female employment.
Vehicle manufacturers may sense opportunities in Saudi Arabia with an expanded market.
And with Tuesday's victory in the bag, proving the influence and accomplishments of Saudi women activists, the #IamMyOwnGuardian hashtag and movement is certainly one to continue watching. "We're proud to have been able to provide extraordinary mobility for women in Saudi, and are excited by the economic opportunities this change could represent for them in the future", a spokeswoman said. It's a little bit of freedom for women.
Under the country's guardianship system, a male family member - normally the father, husband or brother - must grant permission for a woman's study, travel and other activities. "We women are now taken into consideration". Aziza Youssef, a professor at King Saud University who is one of the most vocal Saudi Arabia's women's rights activists has been following on the matter closely.