The agreement on power-sharing, the sharing of resources, and security arrangements was signed by Mustafa Osman Ismail, Khartoum's negotiator, and Mussa Mohammed Ahmed, chief of the Eastern Front.
The signing took place at the presidential palace in the Eritrean capital of Asmara in the presence of President Issaias Afeworki. A ceremony organized to mark the signing began at about 5:30 pm (1430 GMT), an hour later than scheduled.
After introductory speeches, the parties adjourned temporarily for iftar, the breaking of the Ramadan daily fast. During the ceremony, Sudanese President Omar Al Bashir called the peace deal an example of "Africans solving an African problem without foreign help."
That was a preamble to his reiteration that Sudan rejects a United Nations proposal to send a peacekeeping force to the still war-torn western region of Darfur. Ahmed called the accord historic, saying it "definitively turns the page on conflict and opens the way to development."
The deal would be the third peace agreement signed by Khartoum with rebel groups in various parts of the largest nation in Africa in less than two years. An agreement between Khartoum and the main rebel faction in Darfur was signed in May this year but has failed to take hold.
A landmark peace deal was also signed between Khartoum and southern rebels in January 2005, bringing an end to more than two decades of fighting - the longest civil war in Africa.
The former rebel Sudan People's Liberation Movement is now in a national unity government with Bashir's National Congress, but relations have often been strained.
Bashir was to meet Eritrean President Issaias Afeworki on the sidelines of the ceremony, the Sudanese state news agency SUNA reported.
Egyptian Foreign Minister Ahmed Abul Gheit and Arab League Secretary General Amr Moussa are among the foreign officials who attended the signing, which comes amid mounting pressure on Khartoum over Darfur.
The latest round of negotiations between the Sudanese government and the Eastern Front resumed after a ceasefire agreement was reached June 19. The Eastern Front was created last year by the region's largest ethnic group, the Beja, and the Rashidiya Arabs.
The grouping has similar aims to its better-known counterparts in Darfur - greater autonomy and control of resources. Its members have waged a low-level insurgency, and Sudan says the push to defuse the eastern crisis is part of efforts to pacify the whole country by building on peace pacts reached with other rebels.
Sudan's vast eastern provinces include porous and volatile borders with Eritrea and Ethiopia and command access to the Red Sea, the key to the country's economy.
© 2006 Agence France-Presse