Russia's Foreign Minister, Yevgeny Primakov, and Nato's Secretary-General, Javier Solana, clinched the deal in Moscow after months of negotiations often characterised by Russian criticism of Nato's enlargement plans.
The precise terms of the pact, which will be known as the Founding Act, were not made public, but are expected to be approved by Nato leaders in Brussels in the coming days. The document could then be formally signed, as planned, at a ceremony in Paris on 27 May.
In Moscow yesterday, a smiling Mr Primakov described the agreement as "a big victory for reason, a big victory for the world community and a big victory for Russia and all governments in the world that are interested in peace and co-op eration". Mr Solana said the agreement would strengthen European stability and open a new age in Western-Russian relations.
The Russian and American leaders were quick to praise the accord: but also to put their own, sometimes defensive, gloss on the details. President Boris Yeltsin brought forward a scheduled television interview to tell the Russian public that, although Russia remained opposed to Nato expansion, the agreement ensured that relations would be "calm". He also set out crucial assurances that, he said, Russia had won from Nato.
In Washington, President Bill Clinton welcomed the pact as "a historic step close to a peaceful, undivided, democratic Europe". But - in a sign of the tough diplomatic bargaining that had sealed the deal - he gave a significantly different interpretation of some of the key points that had presented by Mr Yeltsin barely an hour before.
While Mr Yeltsin said that the deal would be "binding" on Nato, Mr Clinton said that it was not "legally" binding. While Moscow said it had been given an effective veto over Nato decisions it disliked - "decisions may be taken only by consensus ... if Russia is against a particular decision, this decision will not go through" - Mr Clinton said that Russia had been given "a voice in, but not a veto over Nato's business".
There were differences, too, on whether Nato would be able to deploy troops in forward positions or use military installations in former Warsaw Pact countries, a point of extreme sensitivity to Russia. Mr Yeltsin said: "Nuclear weapons are not to be deployed, no storage facilities are to be used, infrastructure abandoned by the Warsaw Pact is not to be used." But he was ambiguous over the deployment of Nato troops.
Mr Clinton, for his part, said: "There are no plans ... to activate old Warsaw Pact military installations for what you might call traditional Nato aggressive forward posturing. But ... there is an explicit understanding in the agreement that we will have to use some infrastructure for ... operations that are an integral part of being a Nato member."
In a clear attempt to reassure Russia, the US President went on to insist that Russia's security was improved by the agreement, and that Nato had no intention to "move the dividing line of Europe ... further east".
Because the document will not to be "legally" binding it will not have to pass either the Russian Duma or the US Congress.