Israel says the blockade is necessary to prevent Islamist movement Hamas from receiving materials that could be used for military purposes, but UN officials have called for it to be lifted, citing deteriorating conditions in the territory.
Turkey’s ruling Islamic-rooted AKP party has friendly ties with Gaza’s Hamas rulers, and President Recep Tayyip Erdogan has been a vocal supporter of the Palestinian cause.
Turkey and Israel were formerly close regional allies, but fell out in 2010 when Israeli commandos killed 10 Turkish activists in a raid on an aid flotilla seeking to run the blockade on Gaza.
Under the reconciliation deal, Israel will pay $20 million in compensation to the families of those killed.
Prime Minister Benjamin Netanyahu has promoted the economic benefits of restoring ties, with talk of building a pipeline to Turkey to export Israeli gas, and the need to find allies in the turbulent Middle East.
The deal received a mixed response in Israel.
There were allegations that it does not do enough to push for the return of four Israelis missing in Gaza – two soldiers who have been declared dead and two civilians believed to be alive and held by Hamas.
Several relatives and supporters of the soldiers’ families protested against the deal outside Ashdod port on Sunday.