Benjamin Netanyahu unveiled the sign for an yet-unbuilt settlement in the Golan Heights which is named named in honour of Donald Trump, who recognised Israeli sovereignty over the annexed region.
Under Mr Trump, the United States has recognised Israeli claim to the heights, which were seized from Syria during the Six-Day War.
Mr Netanyahu called the American president a "friend of Israel" as he unveiled the settlement's sign. He called "a historic day".
He unveiled the sign, which carries a US and Israeli flag, despite the fact construction on the settlement has not even begun.
David Friedman, the US ambassador to Israel, said the gesture was "well deserved, but much appreciated".
After Israel seized the Golan Heights, it was the scene of intense fighting in the Yom Kippur War in 1973 and Israel unilaterally annaxed the plateau in 1981.
