Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum welcomed Iran's foreign minister at his palace, state media agency WAM reported.
Iranian Foreign Minister Mohammad Javad Zarif discussed bilateral relations and regional developments with the Sheikh, in a sign of warming ties between the nations.
Sheikh Mohammed also received an official invitation to visit Tehran from Iranian leader Hassan Rouhani which "he accepted and appreciated," WAM said.
In an interview with BBC earlier this year, Sheikh Mohammed called for easing of sanctions against Iran.
Asked if the time is now ripe to lift sanctions against the Islamic Republic, Sheikh Mohammed said: "Iran is our neighbour and we don't want any problem."
Zarif also met with UAE foreign minister Sheikh Abdullah bin Zayed Al Nahyan in Abu Dhabi.
Iran and the UAE have longstanding trade ties but differ over several issues, including Tehran's control over three Persian Gulf islands claimed by both countries.
With input from APRead More »from Sheikh Mohammed accepts invitation to Iran