Sarkozy and United Arab Emirates President Sheik Khalifa bin Zayed al-Nahyan signed the deal in what Sarkozy said was "a sign to all that France is participating in the stability of this region of the world," The Washington Post said Wednesday.
The announcement follows the French president's three-day visit to Persian Gulf countries that realized several trade deals in the region, including agreements to build nuclear reactors for energy production in several Persian Gulf countries.
French officials hinted the military base served as a containment measure against a threat from Iran.
France is a major arms supplier to the region and routinely conducts military exercises with the Emirates.
The base is set to become operational in Abu Dhabi in 2009.