He also announced that women would have the right to join the all-appointed Shura (consultative) Council, in an address opening a new term of the council.
"Starting with the next term, women will have the right to run in municipal elections and to choose candidates, according to Islamic principles," he said.
This means that women will be able to take part in the elections that will be held in four years as the next vote is due to take place on Thursday and nominations for those polls are already in.
"We have decided that women will participate in the Shura Council as members starting the next term," the king also said in an unexpected move to enfranchise women in the ultra-conservative kingdom.
Women rights activists have long fought to gain the right to vote in the kingdom that applies a strict version of Sunni Islam and bans women from driving or travelling without the consent of a male guardian.
More than 5,000 men will compete in Thursday's municipal elections, only the second in Saudi Arabia's history, to fill half the seats in the kingdom's 285 municipal councils. The other half are appointed by the government.
The first elections were held in 2005, but the government extended the existing councils' term for two more years.
More than 60 Saudi intellectuals and activists have called for a boycott of the ballot for excluding women.
Saudi Arabia's Shura Council had recommended allowing women to vote in the next local polls, officials have said.
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