Trump, who announced he was pulling US troops out of northeast Syria last month, suggested in a tweet on Sunday creating safe zone, without elaborating.
"The safe zone issue, including a safe zone along Turkey's borders that will be formed by us – an issue that I have brought up since the Obama era – was reiterated by him as 20 miles," Erdogan told members of his AK Party in Parliament.
He later told reporters that the zone could be extended beyond 20 miles, but did not say by how far.
Erdogan said the zone would keep “terrorists out,” protect civilians and stem the flow of refugees.
Bitter differences between Washington and Ankara over the Kurdish YPG militia had soured talks between the two NATO partners.
The YPG has been a main US ally in Syria, but Turkey views it as a terrorist organization and an extension of the Kurdistan Workers Party (PKK) that has waged a decades-long insurgency in Turkey.
Monday's call between the two leaders came after Trump threatened Turkey with economic devastation if Turkish forces attacked the YPG militia.
Erdogan said he was saddened by Trump's tweet but that the phone call later in the day was positive.
Trump's threat to devastate Turkey's economy also sparked concern among investors, sending the lira down as much as 1.6 percent on Monday. Erdogan said he and Trump had agreed to improve economic ties during their phone call.
Erdogan said the two leaders reached an “understanding of historical importance.”
"Turkey will continue to do what it has to in order to solve this issue in line with the spirit of its alliance, so long as our rights and laws are respected," he said. "We reached a historic understanding with Trump last night."
Reuters and AP contributed to this report.