He made the announcement at a meeting of the exiled Palestinian National Council in Algiers, which adopted as its goal a two-state solution in which independent Israeli and Palestinian states would exist side by side.
Minutes later, Algeria became the first country to officially recognise the independent Palestinian state.
Within a few weeks, dozens of other countries followed, including most of the Arab world, India, Turkey, much of Africa, and many countries in Central and Eastern Europe.
The next wave of recognition came in late 2010 and early 2011, when the Middle East peace process was in crisis.
South American countries including Argentina, Brazil and Chile responded to the call to support the Palestinians' claim to statehood.
This comes in response to Israel's decision to end its temporary ban on the construction of Jewish settlements in the occupied West Bank.