The two sides agreed to the terms after 16 hours of negotiation, Seoul's Ministry of Unification said.
The industrial complex's operations came to a halt in April after months of high tension between the two countries due to North Korea's completion of its third atomic weapons test and its threat of nuclear attacks against South Korea and the United States.
Under the agreement, which was signed at 4:05 a.m., inspections will begin Wednesday, Yonhap News Agency said.
"(The suspension of the Kaesong complex) should never have happened in the first place, but the two sides have made some progress in their efforts to resolve the issue," an official from the South Korean presidential office told reporters.
The two sides will meet again Wednesday to discuss implementing safeguards to prevent another shutdown, Yonhap News Agency said.
The complex was created as a result of a historic 2000 meeting between the countries' two leaders, and it is one of the only viable economic links between the two nations.
2014: The Year in Music [PHOTOS]