Davutoglu met with his Iranian counterpart Manouchehr Mottaki for a one-day working visit to discuss bilateral ties and regional developments, Turkey's English-language daily newspaper Today's Zaman reports.
The Turkish minister hailed the "big improvement" in developing ties with Tehran, adding both sides were working to "to achieve joint targets."
The visit by Davutoglu is his fourth since October and comes as Western pressure on Iran mounts in the wake of a decision by Tehran to ramp up its uranium enrichment activity.
"I believe that our frequent contacts with Iran are a must given developments in the region," said Davutoglu.
Ankara and Tehran share common interests in the energy sector. Kurdish militancy emanating from Iraq is also a concern to the two neighbors.
Davutoglu said both sides view political developments in Iraq ahead of March parliamentary elections as defining for the region.
"Iraq's stability and prosperity is as important as our own stability and prosperity," he said.