Emir of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah appointing Aziz Rahim Al-Daihani as the Gulf state's first ambassador to the State of Palestine, reported Ma'an News Agency.
The decision comes as Kuwait works to increase its support for Palestine against Israel's illegal occupation.
Palestinians welcomed Kuwait's move, particularly after Kuwait boycotted the 25-26 June economic summit in Manama, Bahrain, led by Jared Kushner, US President Donald Trump's son-in-law and senior adviser.
Kuwait was the only Gulf state to boycott the event.
In a statement, Hamas spokesman Hazem Qasim said attempts to "integrate the Israeli occupation into the region are doomed to fail".
He blamed the parties that "normalise relations with Israel for Israeli assaults on the Palestinian people and their holy sites".
Khaled Al-Jarallah, Kuwait's Deputy Foreign Minister, said the Gulf state's stance is with respect to the Palestinian cause and is an unwavering position.
He also explained Kuwait will continue to refrain from normalising relations with Israel unless demands of the Palestinian people have been met.
During the 18th summit of the Non-Aligned Movement held in Baku, capital and commercial hub of Azerbaijan, earlier this month, the emir of Kuwait warned that the inability of the international community to find a viable and comprehensive solution to the Palestinian cause is threatening peace and security in the region now more than ever.
Kuwait Times reported that the emir also explained unilateral policies and measures that have been undertaken by Israel for altering realities in the occupied territories are illegal and illegitimate breaches and are also blatant violations of the relevant international resolutions.
He said: "Any solution that falls short of the aspirations and ambitions of the Palestinian people will not be successful."
Israel has been undertaking a major normalisation drive in recent months, which has seen Prime Minister Benjamin Netanyahu and other Israeli establishment figures visit Gulf states including Oman, Bahrain and the United Arab Emirates.
Though Israel and its main ally, the US, have been keen to paint these efforts as a positive step towards Israel's integration into the region, Kuwait opposes the initiative.