Quito announced the plan on Sunday, a day after a meeting between Ecuador's Foreign Minister Ricardo Patino and his Palestinian counterpart, Riyad al-Malki, AFP reported.
Palestinian Authority will also have a diplomatic mission in Quito.
Al-Malki had traveled to Quito to attend the inauguration of President Rafael Correa on Friday.
He expressed gratitude "to the Ecuadoran people... for the support, brotherhood, friendship and sincere and honest solidarity to the Palestinian people's cause."
Ecuador formally recognized Palestine an independent state in December of 2011 and supported its application for UN membership.
"We recognize the claim, the historical struggle of the Palestinian people and their right to participate in the United Nations," President Rafael Correa said at the time.