Magnus Nesser, who has been based in the embassy in Tel Aviv since April 2013, said in an interview with Israeli media that the move by the new government was done with the best of intentions and was not about taking sides.
"Our foreign minister clearly said that the purpose of this step is to encourage the moderate forces in the Palestinian Authority and the Arab world, who want to make peace with Israel through negotiations," Nesser (pictured below) told Walla! News.
He added; "We want to give hope to the moderates as part of our opposition to violence. We do not choose the side of the Palestinians or Israel; we are on the side of peace."
Last month the new Swedish government sparked a diplomatic crisis when it officially decided to recognize Palestine.
Freshly installed Foreign Minister Margot Wallström echoed Nesser's sentiment at the time stating "We are not picking sides. We're choosing the side of the peace process."
Following the announcement Israel recalled its ambassador to Sweden, Isaac Bachman, back to Jerusalem for crunch talks. Bachman said at the time of the decision that it was "premature and counterproductive."
Nesser himself was summoned to the Israeli foreign ministry when it was mooted that his country was going to recognize Palestine. He said on Sunday that he was hopeful that Bachman would return to his post and downplayed suggestions that relations between the two countries were at an all-time low.
"We are very interested in the Israeli ambassador returning to Stockholm, because we have a commercial relationship as well as cooperation in such fields as economics, science, culture and education," said Nesser.
"Sweden believes in Israeli innovation and wants to promote cooperation in this field as well. There are also disagreements between us of course, but that's no reason to ignore all the good things that happen between the two countries."
The Swede, who was previously the ambassador in Iraq for two years, said he was appalled by the continued spate of violence in Jerusalem saying that his country was "totally opposed" to terrorism in all its forms.
Seven EU members have already recognized a Palestinian state — Bulgaria, Cyprus, the Czech Republic, Hungary, Malta, Poland and Romania. Non-EU member Iceland is the only other western European nation to have done so.
Margot Wallström told The Local last month that she anticipated criticism when she made decision about recognizing a Palestinian state.
"We knew that Israel would be critical when we made this decision. I respect that criticism, even though I don't share it. I'm convinced that we have mutual interests to uphold and strengthen our good bilateral relations," she said.
Israel's Foreign Ministry have yet to comment on whether Bachman will be making a return to Sweden in the imminent future.