The agreement came after Bendito dos Santos Freitas, the minister of foreign affairs and cooperation of the Democratic Republic of Timor-Leste, paid an official visit on June 20 and 21.
The visa exemption lasts for up to 30 days.
The agreement's objectives, according to deputy government spokeswoman Radklao Intawong Suwankiri, are to make it easier for Thai and Timor-Leste citizens to travel between the two countries.
During the visit, Freitas met with his Thai counterpart, Maris Sangiampongsa, on Friday.
According to a statement from Thailand's Foreign Affairs Ministry, both sides were pleased with Thailand's close relations and friendship with Timor-Leste. They discussed how to strengthen bilateral cooperation in a variety of areas, including military-to-military cooperation, United Nations peacekeeping operations, and military education.
They addressed Thailand's role as Timor-Leste's long-term development partner in public health, education, agriculture, human resource development, and public services.
The two sides also talked about expanding trade and investment cooperation, as well as encouraging the Thai private sector to invest more in Timor-Leste in a variety of potential areas, including agriculture and food security, tourism, and fishing.
The Thai Foreign Ministry reiterated Thailand's support for Timor-Leste's bid for full ASEAN membership.