Stefan Löfven greeted Mahmoud Abbas at around noon, before the pair sat down to discuss the security situation in Gaza, bilateral cooperation and Sweden's calls for Palestine to restart peace negotiations with Israel.
The Swedish Prime Minister urged the middle eastern country to push for the so-called 'two-state solution', which would involve an internationally-recognized independent state of Palestine existing alongside the Jewish state of Israel, following centuries of debate over land rights in the region.
Mahmoud Abbas' visit to Sweden is his first since the Nordic nation became the first country in western Europe to formally recognize Palestine last year.
The Palestinian President stressed that his government did not intend to give up peace negotiations, saying that hands would be "stretched out" to Israel and stating that he understood the value of negotiation.
Stefan Löfven called on the predominantly muslim state to focus on improving human rights and tackling corruption ahead of the next elections in Palestine, which are set to take place later this year.
Earlier in the day, Mahmoud Abbas met with Sweden's Foreign Minister Margot Wallström for additional talks.
Ahead of the meeting she told Sweden's Aftonbladet newspaper: "The visit also gives us an opportunity to talk about what we think Palestine can offer, in the hope of resuming peace negotiations.”
Tensions have been tight between Sweden and Israel ever since the former's decision to recognize Palestine. The move caused Israel to briefly recall its ambassador to Stockholm, and Wallström postponed a trip to Israel amid suggestions that no Israeli officials would schedule a meeting with her.
On Monday, Israel's Ambassador to Sweden Isaac Bachman told The Local: “The recognition of Palestine, including the additional Swedish steps and policies vis-a-vis the Palestinians has not created a better atmosphere between Israel and Sweden.”
“We were not consulted on this matter, and it is obvious that the recognition came just a few weeks after the end of a bloody rain of fire on Israel from Gaza.”
“If anything, the Swedish recognition is a tailwind to the ongoing Palestinian efforts not to hold direct negotiations with Israel.”
According to the Palestinian Authority, around 135 countries have now recognized the state of Palestine. Peace talks between Israel and the Palestinians collapsed in spring 2014 and a bloody war in Gaza erupted just a few months later.
Sweden's group of opposition centre-right parties, the Alliance, used Abbas' visit to criticize the Social Democrat-Green coalition government's approach to the Israeli-Palestinian conflict.
Liberal party leader Jan Björkland said that recognizing Palestine had "blown" Sweden's chances of "establishing good relations with Israel" and argued that Sweden's government was "throwing new money" at old policies that had failed to work.
Karin Enström, who is foreign policy spokesperson for the Moderates party criticized Stefan Löfven for failing to focus on ending violence in the region.
"What I was missing from Stefan Löfven was a clarity on ending the violence. He spoke about democracy and human rights but not explicitly about ending the use of violence," she told Swedish newswire TT.
"We still think that it was wrong to recognize Palestine," she said, adding that her party would have preferred requirements for the state's future behaviour to be outlined and agreed on ahead of any formal recognition.