"The king of the brotherly Kingdom of Saudi Arabia is offering this generous and appreciated aid of $3 billion to the Lebanese army to strengthen its capabilities," Michel Suleiman said in a surprise televised address.
The grant will let Lebanon buy "newer and more modern weapons" from France after "decades of unsuccessful efforts" to build a credible Lebanese national defense force, Suleiman said, adding he hoped Paris would quickly work with Beirut to bolster Lebanon's military with arms, maintenance and training.
Saudi leaders had no immediate public comment on the grant.
Analysts see the gift as a challenge to the Iranian-allied Hezbollah paramilitary wing's status as Lebanon's main power broker and security force, the Wall Street Journal said.
Mustapha Alani, a senior Persian Gulf security adviser close to Saudi security officials, told the newspaper the Saudi intention behind the gift was "not to go and open war with Hezbollah, but definitely it is to rebalance."
He said the gift is a five-year package that will let Lebanon's armed forces not just buy new French weapons systems but also make broad improvements in areas such as military bases and recruitment.
Hezbollah's paramilitary wing, widely considered more powerful than Lebanon's army, is hailed in parts of the Arab and Muslim worlds as a resistance movement against Israel.
But it is considered a terrorist organization by the Gulf Cooperation Council of Persian Gulf countries Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, as well as by the United States, France, Britain, the European Union, the Netherlands, Canada, Australia and Israel.
Suleiman has also become increasingly critical of Hezbollah.
Hezbollah and Israel had no immediate public response to Suleiman's Sunday announcement.
Saudi Arabia called Friday for Lebanon to build up its armed forces after Lebanese Cabinet Minister Mohamad Chatah and five other people were killed by a car bomb.
Chatah was an outspoken critic of Hezbollah's dominance of Lebanese affairs and security.
No group had claimed responsibility for the bombing that also injured more than 70.
The $3 billion Saudi grant is three times greater than the $1 billion in U.S. aid to Lebanon's armed forces since 2006.
President Barack Obama pledged $8.7 million in assistance to Suleiman in the fall -- an offer Suleiman scoffed at, Lebanese officials at the meeting told the Journal.
Suleiman told Obama the money wouldn't be enough to help Lebanon keep jihadists from crossing its border into Syria to fight in the Syrian civil war, the officials told the newspaper.