The office is expected to begin operating at the start of 2014 and support companies from startups to large organizations as they move to cloud computing services offered by Amazon.
Companies in Israel, which has a large concentration of technology startups, were among the first to turn to cloud computing when AWS was established in 2006, the CTO said.
"If you start a business today you no longer buy IT (information technology). You spend your money on getting better engineers and product builders," Werner Vogels told a news conference.
AWS, which said it is the market leader in cloud computing, rents remote computing and storage to other companies, providing over 30 different services.
Vogels said Amazon is focused on driving costs down and has lowered the price for its services 37 times since 2006.
"We've always know that this is not a winner take all market. There is room for many providers with differentiating products," he said.