U.N. Special Envoy to Myanmar Vijay Nambiar and representatives from the ethnic umbrella group United Nationalities Federal Council helped broker the agreement with the Kachin Independence Organization -- the political wing of the Kachin Independence Army.
Despite moves by the elected civilian government of former Junta leaders to a more open and democratic society, rebel groups in Kachin, Karen, Shan and Mon states have continued their long struggle against central control.
The conflicts have been running for most of the years since Myanmar -- formerly called Burma -- gained independence from the British in 1948.
Many rebel groups also are fighting for a greater share in the exploitation of natural resources to raise living standards in their regions.
Observers say they hope the Kachin deal will end the violence, condemned by human rights groups, in which about 100,000 people have been displaced, reported the news website Democratic Voice of Burma.
The peace deal comes after two years of bitter fighting that started when a shaky 17-year cease-fire collapsed in June 2011.
Under the agreement, Kachin rebels and the government will set monitoring offices, demarcate territory and launch rehabilitation projects for displaced people, DVB reported.
At an official ceremony in the Kachin capital of Myitkyina, KIO's main negotiator Sumlut Gam shook hands with a smiling President's Office Minister Aung Min.
"The agreement includes [provisions] to continue the political discussion between the government and the KIO, to prevent further clashes while efforts are under way to reduce fighting," said Hla Maung Shwe from the government's Myanmar Peace Center in a telephone interview with DVB.
Further talks will be needed to cement a more lasting peace deal, said Hla. More third-party observers, a long-standing demand by the KIO, will be considered for inclusion in future peace talks.
News of the signing comes after one person was killed and five injured in religious clashes in Lashio, capital of northeastern Shan state.
State media said Buddhist youths armed with sticks searched the streets for Muslims to attack and Muslim-owned houses and businesses were set on fire, the BBC reported.
The clashes were sparked by rumors a Muslim man had doused a Buddhist woman with fuel at a gas station and set her alight.
Authorities said they had imposed a curfew after about 1,000 demonstrators gathered in the city's square demanding the release of the suspect.
In the eastern state of Rakhine in the past year, the 800,000 Muslim Rohingya living as a minority have been targeted by mobs of local Buddhist ethnic Arakanese.
More than 100,000 Rohingya have been displaced to security camps to live in dire conditions. Also, more than 1,000 people have been killed in violence against Royhinga, many more than the government's estimate of around 190, human rights groups have said.
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