The visit follows a groundbreaking trip by Modi to Israel, and one to New Delhi by his Israeli counterpart, Benjamin Netanyahu.
Modi will not be entering Ramallah from Israel and is instead flying to Jordan first before taking a helicopter ride from Amman to the Palestinian city. In a statement issued to the press, the Palestinian presidency on Wednesday welcomed the upcoming "historical and significant" visit of the Indian premier.
Modi is also scheduled to visit the United Arab Emirates and Oman as part of a four-day trip to the region. In Ramallah, he is scheduled to tour the Yasser Arafat Museum, hold talks with the Palestinian leadership and attend a banquet lunch, according to the ministry of external affairs.
"This is a stand-alone visit. We have de-hyphenated our relations with Palestine and Israel and now we see them both as mutually independent and exclusive, and, as part of this policy, the Prime Minister is undertaking this visit," said Bala Bhaskar, an official in charge of West Asia in the ministry.
Modi raised eyebrows in July last year when he became the first Indian prime minister to make a stand-alone visit to Israel.
In January, Israeli PM Netanyahu was in India for a six-day visit and the bonhomie between the two leaders was clearly on display at various times.
Analysts said Modi's visit to Ramallah comes at a crucial time, after United States President Donald Trump's controversial decisions to recognise Jerusalem as the capital of Israel and cut off aid to Palestine.
Zikrur Rehman, India's former ambassador to Palestine, said: "India has always remained at the forefront, stating clearly East Jerusalem should be the capital."
"In the last few statements (on the issue), this has been dropped. This is a core issue as far as Arabs are concerned. How he handles this will be important."
There was no mention of the issue, for example, while Modi was in Israel as well as when he issued a statement on the International Day of Solidarity with the Palestinian people on Nov 25.
Modi's trip to Oman and the United Arab Emirates - both of which have a sizeable Indian population - takes place soon after a visit by Foreign Minister Sushma Swaraj to Saudi Arabia.
The Gulf region is important to New Delhi not only for security in energy supplies but also because 2.6 million Indians work there and send money back home to their families.
Modi government has also sought to ramp up India's engagement with West Asia and the rest of the Arab world as it seeks to attract foreign investment. "We are looking at redefining our neighbourhood, looking at our neighbourhood not only from the land perspective but also from the maritime perspective," Raveesh Kumar, a ministry of external affairs spokesperson, at a recent press briefing on the Prime Minister's visit to West Asia.
Kumar added that ties with the Gulf countries were not just about the large Indian population but also an effort "to broad base our engagement with these countries into moving towards a more strategic sphere both on trade and investment as well as on defense and security".