Just over 70% of revenues came from oil last year but it has been hit by falling prices in the past year.
One part of the plan will see shares sold in state-owned oil giant Aramco to create a sovereign wealth fund.
Announcing the reforms, Deputy Crown Prince Mohammed bin Salman described his country as being addicted to oil.
The Vision 2030 plan, he told the Saudi-owned Al-Arabiya news channel, would ensure “we can live without oil by 2020”.
Among the reforms he announced in his interview were:
Shares worth less than 5% of Aramco, a company he valued at up to $2.5tn (£1.7tn), will be sold
Some of the proceeds will go towards a sovereign wealth fund worth $2tn
A new visa system will allow expatriate Muslims and Arabs to work long term in Saudi Arabia
Steps will be taken to diversify the economy, including investment in mineral mining and expanding military production
Participation of women in the workforce to increase
Even just selling 1% of Aramco would create the biggest initial public offering in history, the prince said, outstripping blockbuster sales like Facebook and Alibaba.
The IMF called the Saudi plan an “ambitious, far-reaching effort” but warned implementation would be a challenge.
Oil has made Saudi Arabia a major economic force. But it comes at a cost. The short-term problem is the volatile price of crude oil, which is now less than half what it was in mid-2014. Saudi Arabia has deep pockets.
It will not go running to the International Monetary Fund for financial help, something another oil exporter, Angola, has done. But the Saudi reserves are eroding and with almost three quarters of government revenue coming from oil, the price fall is making itself felt.
For the long term, international efforts to combat climate change create huge uncertainty about demand for oil in the future. Oil will not lose its dominance of the market for transport fuel in the next few years, but further ahead the outlook is unknown.
So Saudi Arabia needs to become less dependent on oil for government revenue and for the jobs and incomes of Saudi nationals.
Oil prices are still less than half the peak of $115 a barrel seen in June 2014. But the prince said the reforms would go ahead regardless of prices.
“The vision has nothing to do with crude prices,” he said.
“If the oil price goes back up it would greatly support the vision but it does not need high prices. We can deal with the lowest prices possible.”
In an interview with Bloomberg last week, Prince Mohammed said taxes on luxury goods and sugary drinks could also be introduced.
However, he said it was crucial that the programme would not leave the country’s poor worse off.
The prince is second-in-line to the Saudi throne and also serves as defence minister.
Vast oil revenues have allowed the Saudi government to offer generous subsidies on utilities to its population. But some of these were cut last year in response to falling oil prices.
Over the weekend King Salman sacked the country’s water minister amid outrage at rising utility prices.