The office will not be a full mission, but will consist of a diplomat assigned to the renewable energy agency. Nevertheless, it will be the first time an Israeli foreign ministry official is permanently stationed in the Gulf state.
Foreign ministry spokesman Emmanuel Nahshon confirmed details first reported in Israeli media and three diplomatic officials told Reuters the move was underway. A spokesperson for IRENA could not be reached for comment.
Israel does not have formal diplomatic ties with most states in the Middle East because of the decades-old Israeli-Palestinian conflict. Its only formal relations are with neighbours Egypt and Jordan.
But the Iran nuclear deal has caused disquiet in Israel and Sunni Arab states alike. Common ground has emerged between the two sides, even if they are cautious about drawing attention to the links.
In recent years, Israeli officials have met counterparts from Saudi Arabia and the Gulf at nuclear non-proliferation talks in Switzerland, gatherings that the Israelis say have helped melt the ice and lead to increased dialogue.
The director-general of Israel's foreign ministry, Dore Gold, visited Abu Dhabi this month, the first time someone of his diplomatic rank has publicly made such a trip. Israeli ministers have visited the Gulf.
While the Abu Dhabi mission is seen as a positive step, at least one Israeli official voiced caution, saying that while it was "half a step out the door", it was still a long way from being a full diplomatic posting.