Twelve Pacific Rim countries reached the most ambitious trade pact in a generation that cuts trade barriers, sets labour and environmental standards and protects multinational corporations' intellectual property.
It aims to counter the might of China and will cut trade barriers affecting everything from the price of cheese to the cost of cancer treatments.
The agreement on the Trans-Pacific Partnership (TPP) was reached on Monday after lengthy negotiating sessions in the US city of Atlanta through the weekend.
"We think it helps define the rules of the road for the Asia-Pacific region," US Trade Representative Michael Froman said.
The TPP is designed to encourage trade between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Together they account for 40 percent of the world trade.
Explainer: Deconstructing the Trans-Pacific Partnership
The agreement - the largest regional trade deal in history - will now have to be approved by the legislators of each signing country.
Many of the details of the deal were negotiated in deep secret, drawing persistent criticism that business interests dominated the talks and that the public interest in many countries was being thrown aside.
Public health advocates, environmentalists, and labour groups are among the critics.
Aid groups have argued that the TPP protections concerning pharmaceutical drugs will lead to companies raising prices and restricting access to products needed by some of the world's poorest populations.
Internet privacy advocates are also concerned that regulations on intellectual property will go too far.
US legislators cautiously welcomed the deal.
Republicans, whose party controls both the Senate and House of Representatives, broadly favour free trade, but their key lawmakers reserved judgement, stressing they will need time to comb through the TPP.
| 'Trans-Pacific Partnership is going to cost lives': Access to Medicines advocate
The most strident opposition will likely come from liberal Democrats who fear the deal would weaken some US industries and erode American jobs.
Congress can only give the deal an up-or-down vote; it cannot amend the agreement.
Japanese Prime Minister Shinzo Abe welcomed Monday's agreement, saying it would benefit both Japan and the Asia-Pacific region.
"It is a major outcome not just for Japan, but also for the future of the Asia-Pacific," Abe told reporters shortly after the deal was clinched.
Australia also hailed the deal as a huge opportunity for businesses, farmers, and manufacturers.
"Any deal like this is of enormous benefit to us," said Prime Minister Malcolm Turnbull. "It is a gigantic foundation stone for our future prosperity."