"I am pleased to announce this assistance package to support Palestinian economic development on the day that the Palestinian Prime Minister [Rami] Hamdallah is here in Brussels," EU foreign policy chief Catherine Ashton said in a statement.
The EU said the package was aimed to supporting private sector jobs, Palestinian infrastructure and small capital investments in East Jerusalem as spelled out in a two-year development plan.
Ashton said the EU was committed to Palestinian state-building processes. Palestinian leaders gained more recognition from the U.N. General Assembly last year.
"The ultimate objective of the EU's financial assistance remains the establishment of a Palestinian state living side by side with Israel in peace and security," Ashton said.
U.S. Secretary of State John Kerry tried to put more diplomatic capital behind a stalled Israeli-Palestinian process earlier this year. U.N. Secretary-General Ban Ki-moon said 2013 would be a decisive year for a two-state solution to the crisis.