The missile shield is designed to protect European countries against the increasing threats posed by the proliferation of ballistic missiles, NATO said Sunday.
Members of the alliance agreed to the system in Lisbon in November 2010.
"In Lisbon, we agreed to create a NATO missile defense system. Today, in Chicago, we have declared that a reality," NATO Secretary-General Anders Fogh Rasmussen said Sunday.
"Our system will link together missile defense assets from different allies -- satellites, ships, radars and interceptors -- under NATO command and control. It will allow us to defend against threats from outside the Euro-Atlantic area," Rasmussen said.
Basic command and control capability for the interim system has been tested and installed at Alliance Air Command in Ramstein, Germany. NATO said members of the alliance will provide sensors and interceptors to connect to the system.
Full operational capability is expected by the end of this decade or early in the next, NATO said.