The lease, which was to expire in 2017, allows the fleet to access the Ukrainian port of Sewastopol.
Ukrainian President Viktor Yanukovych and his Russian counterpart Dmitry Medvedev agreed to the deal, which was signed Wednesday in the eastern Ukrainian city of Kharkiv, BBC News reports.
It comes as the latest sign of improving ties between Moscow and Kiev.
Since being inaugurated in February, Yanukovych has made it clear he wants to improve ties with Ukraine's powerful neighbor Russia.
Yanukovych earlier this month abandoned the country's NATO membership plans, which had angered the Kremlin. At the same time, he has been careful not to alienate the West, choosing Brussels as his first foreign trip.
The former Ukrainian government has had trouble paying the bills for imported Russian gas, which led to several price rows with Moscow.
One such conflict last year temporarily halted supplies to Europe, damaging Kiev's reputation as a reliable transit partner.
Notable deaths of 2014 [PHOTOS]