French President Emmanuel Macron made the announcement at a United Nations conference, receiving a standing ovation from the Palestinian delegation and other leaders.
The recognition aims to generate new support for a two-state solution to the Israeli-Palestinian conflict, despite expectations of limited immediate impact on the ground.
Israeli Prime Minister Benjamin Netanyahu's government opposes Palestinian statehood, viewing it as a reward for Hamas, and has hinted at potential unilateral steps in response.
Netanyahu is scheduled to discuss Israel's response with President Donald Trump, whose administration also opposes the growing international recognition of a Palestinian state.