Addressing the parliament's inaugural session, Egyptian President Hosni Mubarak said the new institution was in line with the aspirations of the Arab people for greater democracy.
Arab League Secretary-General Amr Mussa said the creation of the parliament was proof that development of democracy in the Arab world is under way.
Deputies later elected Mohammed Jasim al-Saqr of Kuwait as the first speaker of the Arab parliament.
The current 88 members of the parliament -- four from each of the Arab League's 22 members -- were nominated by their governments and will serve for a five-year period.
A permanent Arab parliament, which will eventually be based in Damascus, aims to become an elected legislature.
Its creation, approved by the Arab summit in Algiers in March, is part of an effort to revitalize the activities of the Arab League in the region.
A slideshow of images related to the top news stories of 2005.