The agreement came after Bendito dos Santos Freitas, Minister of Foreign Affairs and Cooperation of Timor-Leste, paid an official visit to Thailand on June 20-21.
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 June 21.
According to a statement from Thailand's Foreign Affairs Ministry, both sides were pleased with the bilateral close relations and friendship.
They discussed how to strengthen bilateral cooperation in a variety of areas, including military-to-military cooperation, United Nations peacekeeping operations, and military education.