He has proposed lowering the 10% electoral threshold, which currently prevents Kurdish and other smaller parties entering parliament.
He says towns will be allowed to take Kurdish rather than Turkish names.
He also plans to end the ban on women wearing headscarves in public service – a longstanding goal of his party.
“This is a historic moment, an important stage,” Mr Erdogan said.
The reforms are a long-awaited move to improve the rights of Turkey’s Kurds, who are thought to make up about 20% of the population.
They are seen as a vital part of efforts to end the three-decade conflict between the government and Kurdish rebels, which has cost more than 40,000 lives.