The visit by Erna Solberg is the first high-level exchange since December, when the two countries normalised ties that soured after the Oslo-based Nobel Committee awarded the 2010 Peace Prize to the still-imprisoned Chinese activist Liu Xiaobo.
Solberg's visit, the first to China by a Norwegian prime minister for a decade, began Friday and will end Tuesday.
"Your visit this time holds a lot of significance," Xi told her at a meeting in the Great Hall of the People.
He noted that Norway had been one of the first Western countries to recognise the People's Republic of China, and one of the earliest to recognise its status as a market economy.
Solberg said she was "delighted to be back" in China and Norway's king was also happy to accept Xi's invitation to visit in the autumn of 2018.
On Friday she met Premier Li Keqiang, signing numerous cooperation documents including an agreement to resume negotiations on a free trade pact.
Liu Xiaobo was sentenced in 2009 to 11 years in jail for "subversion", after he co-wrote a text calling for democracy in China. His wife Liu Xia remains under house arrest.
Diplomatic relations and trade talks were frozen after Liu was given his Nobel. Norway's salmon industry suffered as exports to China were halted.
Exchanges only resumed last December after Norway pledged its commitment to the one-China policy and respect for China's territorial integrity.
The Western media often blamed China for "converting its economic power into strategic influence", but cooperating on economic goals was ultimately more beneficial than clashing over human rights issues, an editorial in the Global Times newspaper, which often takes a nationalistic tone, said Monday.