It is one of the most important sites in Christianity, yet until now has been largely closed to visitors since Israel took the region from Jordan.
The site lies close to an Israeli military post in the Jordan Valley and had to be cleared of landmines left over from years of hostility between Israel and Jordan.
It sits across from a baptism site on the opposite bank on Jordanian territory.
According to the Associated Press, the Israeli site cost $2.3 million to renovate, with a large part of the money having to be spent on clearing mines from the area.
Christian leaders and Israeli minister for regional development, Silvan Shalom, was present at a ceremony yesterday to formally open the site.
Absent from the ceremony were representatives of Jordan and the Palestinians, who have reacted angrily.
Khouloud Daibes, Palestinian tourism minister said: "This is a site in the occupied territories, and whatever Israel authorities are doing on Palestinian sites we consider illegal and part of seizures related to the occupation and Israel's monopoly over our historic and touristic resources."
Jordan has raised its own objections, declaring that the place where Jesus was baptised is on their side of the river.