Palestine and signed four cooperation deals in the Latin American state's capital Bogotá on Friday.
The two countries foreign ministers, Riyad Al-Maliki and Álvaro Leyva, signed deals including a memorandum of understanding covering technical cooperation and an agreement on removing visa requirements for those with diplomatic and official passports, the official Palestinian news agency Wafa reported.
The move – a first since bilateral ties began – comes after a "State of Palestine" street was inaugurated in Bogotá on Thursday in a show of support for Palestinians.
The ceremony began with both countries' national anthems and saw Palestinian Ambassador Raouf Al-Maliki praise the city council.
Foreign Minister Riyad Al-Maliki cut the ribbon with Councillor Ana Teresa Bernal, Wafa reported.
"Bogotá City Council member Ana Teresa Bernal expressed her pride in naming one of the city's most prominent streets after the State of Palestine, a move that she said testifies to the Colombian people's support and solidarity with the Palestinian people and their righteous quest for an independent state," the news agency said.
The use of the word "state" in the street's name is significant.
While the United Nations General Assembly voted in 2012 to grant Palestine non-member observer state status, major powers including the US and UK do not recognise the country's statehood.
Though Palestine has achieved state status at the UN, the Palestinian people's desire for self-determination has not been fulfilled.
The West Bank, including East Jerusalem, and besieged Gaza Strip remain occupied by Israel according to international law.
Israeli authorities maintain a crushing system of control over these territories.
Colombia's signing of deals with Palestine comes as other Latin American countries have deepened ties with Israel.
Israel last month said Paraguay was set to relocate its embassy to Israel to Jerusalem and that Uruguay was to launch a new diplomatic mission – not an embassy – in the city.
Most countries – with the notable exception of the US – maintain their embassies in or around Tel Aviv, to avoid giving support to Israeli claims of sovereignty over Jerusalem.
Israel captured East Jerusalem in 1967 and annexed it in 1980.