The deal was struck by the erstwhile rivals, the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP), in meetings overnight, Kurdish sources said Tuesday.
Fawzi Atrushi, a top PUK official, said he expected "an announcement in one week on the unification of their two administrations".
"There are only a few details to work out," he said after the meeting in Salahuddin, 350km north of Baghdad.
Omar Said Ali, who headed the PUK delegation, said the two parties were due to hold a new meeting "to distribute Massoud Barzani's KDP controls the northwestern provinces of Arbil and Dohuk, while Jalal Talabani's PUK rules the northeastern province of Sulaimaniyah.
The provinces have enjoyed virtual autonomy since the US and British implemented a no-fly zone over their provinces to protect them following the 1991 Gulf War.
Over the past 10 days, the Kurds have won guarantees to keep their virtual autonomy when the US-led coalition ends it occupation of Iraq in June.
Until the countdown to the 2003 US invasion of Iraq, Barzani and Talabani viewed one another with mistrust. Their parties fought each other to disastrous effect in the mid-1990s.