Negotiators agree to expand charter flights, increase tourism and set up offices.
The move to start direct flights follows talks in May when Taiwan’s ruling party leaders visited Beijing and agreed to resume talks with China.
The two sides entered negotiations in mid-June on improving economic ties and lifting travel restrictions, which subsequently led to the landmark deal.
Liu Shao-yong, president of China’s Southern Airlines, piloted the Airbus A330 jetliner during the 100-minute flight.
“This is a sacred moment. The two sides of the strait are like members in one family,” he said after landing.
“Flying over the strait to Taiwan is like coming home. It feels good.”
Several fire engines shot water streams at the aircraft in a welcome gesture as Taiwanese officials stood watching nearby.
Taiwan’s China Airlines also flew more than 300 Taiwanese on a charter flight to Shanghai earlier in the day.
There have been no regular direct flights since 1949 when the two sides split amid a civil war, with Taiwan barring direct travel for decades as a security measure.
China continues to claim the island as part of its territory.
“We were lucky to be on the plane since many people were fighting for seats on the inaugural flight,” said Wang Yu, a Chinese businessman from Zhuhai in southern China.
Tsai Chang-lung, a Taiwanese businessman, told AFP he and his wife were “happy to enjoy this historic moment together”.