"The agreement will serve as a key launching pad for a take-off in the South Korea-US alliance, praised as the most successful bond in the past 50 years," the South Korean president's office said in a statement.
The United States, stretched by engagements in Iraq and Afghanistan, had hoped to transfer command as early as 2009, but ultimately agreed to South Korea's insistence that responsibilities be shifted at a slower pace.
"The approach that we're taking is an incremental approach, using our normal training cycles and developing this road map to determine those things that need to be in place for both sides to be comfortable with this transition," Air Force Major David Smith, a Pentagon spokesman, said.
About 29,500 US personnel are stationed in South Korea which has an armed forces of 680,000 troops.
They face a North Korean military that has more than one million troops, many of which are deployed near the demilitarised zone that divides the Korean peninsula.
South Korea's Yonhap news agency quoted an unidentified government official as saying that Seoul had been drawing up a new wartime operation plan focusing on defence rather than counter-attacks to replace the existing Operation Plan 5027.
Operation Plan 5027 sets out plans for the combined forces to stage a counter-offensive in the event of an attack from North Korea.
South Korea also plans to improve its intelligence-gathering ability, for which it has previously relied heavily upon US forces, a South Korean defence ministry spokesman said.
The two countries will work together to speed up the relocation and consolidation of US military units and facilities, the Pentagon said.
The headquarters of US Forces Korea is being transferred from Yongsan in Seoul to Camp Humphries, a base 70km south of the capital.
The United States plans to reduce its forces in South Korea to 25,000 by 2008 and is seeking flexibility to deploy them elsewhere in times of need.
North Korea's nuclear test in October and missile tests in July have aroused some concern about the planned command changes.