The king, whose age and frequent hospitalisation have raised concerns about the future leadership of the key oil producer, was admitted to the King Abdulaziz Medical City in Riyadh, a court statement carried by the official SPA news agency said.
The king is believed to be around 90 although his exact age is unknown.
The Saudi stock market dropped by about five percent at one point following the royal court's announcement, before clawing back some of its losses to finish the day 1.8 percent lower.
Markets around the region had already been depressed by sharp falls in world oil prices.
Abdullah's half-brother Salman, 77, is next in line to the throne. He was named crown prince in June 2012 following the death of Prince Nayef bin Abdul Aziz.
Salman has been representing the king at most public events, including the latest Gulf summit in Qatar this month, owing to the monarch's ailing health.
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The king's latest hospitalisation comes as Saudi Arabia holds a high-profile position in the US-led fight against the Islamic State group, which has seized swathes of neighbouring Iraq and Syria.
Saudi warplanes have joined in coalition air strikes against the jihadists in Syria, although the ultra-conservative Muslim kingdom has faced calls to do more to halt the flow of funds and fighters to IS from among its own citizens.
The king's absence from the public gaze for some time last year prompted rumours on social media networks that his health was deteriorating.
He underwent two operations in October 2011 and November 2012 to correct "ligament slackening" in the upper back.
Since the death in 1952 of King Abdul Aziz al-Saud, the founder of modern Saudi Arabia, the throne has systematically passed from one of his sons to another, brothers and half-brothers.
But many of Abdul Aziz's sons are old or have died. Abdullah's former crown princes Sultan and Nayef died in 2011 and 2012 respectively.
In March 2014, King Abdullah named his half-brother Prince Moqren as a second crown prince, in an unprecedented move aimed at smoothing succession hurdles.
Moqren is the youngest of Abdul Aziz's sons.