Diplomatic relations were frozen for decades after Egypt signed the 1979 peace treaty with Israel and Iran went through the Islamic Revolution. But Morsi has been reaching out to Tehran since he came to power in June 2012.
Morsi broke barriers by visiting Tehran after his June election, marking the first visit by an Egyptian leader in more than three decades. Months later, Iranian President Mahmoud Ahmadinejad visited Cairo to attend a conference of Islamic nations.
There is a new bilateral deal to promote tourism and improve relations between the regional heavyweights. And the group of Iranian tourists arrived on some of the first commercial flights between the two countries in 30 years, according to a security official.
Their movements will be restricted, including a ban on visiting Egypt's capital, following objections from some ultraconservative Sunni Muslims to receiving visitors from Shiite Iran.
Members of the Salafi movement in Egypt, like other Sunni hardliners around the region, consider Shiites heretics, and fear Iran is trying to spread its practices among Sunnis.
A visiting Iranian official was heckled by Salafi protesters last week as he tried to make his way to a conference organized by the Sunni world's most prestigious learning institute, al-Azhar, briefly stopping the meeting.
The Iranian tourists will only be allowed to visit certain areas, such as ancient cities and Red Sea resorts like Sharm el-Sheikh. Cairo has several Shiite shrines that the tourists will not be visiting.
Iran's Deputy Foreign Minister for Arab and African Affairs said in a news conference in Cairo on Monday that tourists from his country don't have a religious agenda and that they are coming to Egypt to support its economy.
"Iran has no agenda to manage Egyptian mosques," he said. "Iranian and Egyptian relations are at the best."
The group reached Luxor late Monday in a tourist boat coming down the Nile from the southern city of Aswan. The docking area, opposite a major security station in the city, was heavily guarded.
They are expected to spend the night on the boat. The group is visiting ancient Egyptian sites in Luxor, including the famed open-air Karnak Temple and the Valley of the Kings where Tutankhamen's tomb lies. They will spend a night in the city after already having spent nearly two days in another ancient southern city, Aswan.
Luxor resident Wael Ibrahim said that his union of tour guides is happy to welcome the Iranians to Egypt, where tourism has been devastated following two years of turmoil and protests around the country.
Thousands of people who work in the tourism industry have lost their jobs, affecting the country's already weakened economy.
Bakri Abdul-Jalil, who owns shops in Luxor that sell trinkets and other souvenirs, said that other regional tensions have not stopped tourists from coming to Egypt.
"All are welcome to Egypt. Other tourists, like Israelis coming to the Sinai Peninsula, do not need a (prior) visa and no one is objecting to that," he said.