"Today the government communicated to the ambassador of Palestine in Lima recognition of the Palestinian state as free and sovereign," said Peruvian Foreign Minister Jose Antonio Belaunde.
Brazil led the move to recognize Palestine late last year, and has since been joined by Argentina, Bolivia, Chile, Ecuador, Guyana and Uruguay.
An Israeli official earlier this month dismissed recognition of a Palestinian state by the Latin American nations as "a useless and empty gesture because it will not change anything."
But with peace talks stalled, the Palestinians have said they are considering new diplomatic options and have welcomed the recognition.
Belaunde did not say what borders Peru recognised, only that details of the decision would come later.
"Peru since 1947 has maintained in the United Nations that there should exist a state of Israel, with secure borders, and a Palestinian state," he said. "That has been the position that Peru has permanently maintained."
Belaunde also stressed that Monday's announcement was not the result of "pressure from either side."
Brazil and some of the other South American countries have recognised Palestine within the 1967 borders, which include east Jerusalem, the West Bank and the Gaza Strip, lands occupied by Israel in the Six Day War.
Israel has annexed mostly Arab east Jerusalem, a position not supported by the international community or the Palestinians, who hope to establish the capital of their own future state there.
US-backed Israeli-Palestinian peace talks last collapsed in September 2010 when a limited moratorium on Israeli settlement construction in the occupied territories expired.
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