Israel's Prime Minister Benjamin Netanyahu phoned Turkey's Recep Tayyip Erdogan on Friday to apologize for the 2010 Gaza flotilla raid in which nine activists died, dpa reports.
Their first talk since 2009 was brokered by US President Barack Obama, on an Israel and West Bank visit, to end a diplomatic freeze between the two countries.
Netanyahu and Erdogan agreed to return their respective ambassadors and pledged to overcome their differences.
The Israeli premier apologised for "operational mistakes" which left nine Turkish activists dead when Israel took over the flotilla bound for the blockaded Gaza Strip in May 2010.
Israeli naval commandos intercepted the six ships in international waters. Violence broke out on one, the Mavi Mamarma, between Israeli troops and pro-Palestinian activists.
Netanyahu said the deaths had not been intentional and agreed to pay compensation. The conversation took place just before Obama left Israel after a three-day visit.
The US president said he welcomed the call, and hoped it would pave the way for deeper cooperation between two countries with whom the US has close partnerships.
Relations between Turkey and Israel, once close allies, had deteriorated since before the flotilla incident.