Presidents Suleiman and Assad held a groundbreaking summit in August
Syria's President Bashar al-Assad has issued a decree to set up diplomatic ties with Lebanon and open an embassy.
Anti-Syrian politicians in Lebanon and their Western backers have long called on Syria to recognise its sovereignty by establishing official ties.
The presidential decree did not say when the embassy would open in Beirut or give any further details.
Syrian troops left Lebanon in 2005 ending years of military and political domination by the giant neighbour.
The decree announced "the establishment of diplomatic relations between the Syrian Arab Republic and the Lebanese Republic and the creation of a diplomatic mission at ambassador level in the Lebanese capital Beirut," Syria's official news agency reported.
Lebanese officials said Foreign Minister Fawzi Salloukh would visit Damascus on Wednesday and the timing of the next moves would be announced later.
Syria and Lebanon have been in the process of normalising relations and their presidents have made clear in recent months their intention to start diplomatic ties.
But tensions have been raised again since September when Syria deployed 10,000 troops on the northern Lebanese border, prompting anti-Syria politicians in Beirut to raise the possibility of an invasion.
Washington - a strong backer of the Lebanese anti-Syrian movement - has said it is concerned about the troop movements and warned Damascus against interfering in Lebanon.
President Michel Suleiman - who has the support of both Lebanon's pro- and anti-Syrian factions - said he accept Syria's explanation that the deployment is to prevent smuggling.
Many Lebanese blame Syria for the killing of former Lebanese PM Rafik Hariri in 2005.
An international tribunal into Mr Hariri's death, which has already implicated the Syrian intelligence apparatus, is still a major potential stumbling block in bilateral ties.
Damascus strongly denies any involvement in Mr Hariri's death.
During a groundbreaking visit to Damascus by Mr Suleiman in August, the two sides also agreed to tackle longstanding Lebanese demands to demarcate borders and investigate the question of missing Lebanese prisoners in Syria.
Correspondents say Damascus still has considerable influence over Lebanese affairs, much to the frustration of anti-Syrian politicians.
Syria's close ally, the Lebanese Hezbollah movement, which has Lebanon's most powerful military force, is now part of a national unity government and has the power of veto over its decisions.