King Salman ordered the reform in a royal decree delivered on Tuesday night, requesting that drivers licences be issued to women who wanted them.
The decision comes amid a broad reform program that last week led to women being allowed into a sports stadium for the first time.
It is the most significant change yet to a rigidly conservative social order in Saudi Arabia that has strictly demarcated gender roles, and severely limits the role of women in public life.
Earlier this month, a Saudi cleric was banned from preaching after saying that women should not be allowed to drive because their brains shrink to quarter the size of a man’s when they go shopping.