Former Honduran President Manuel Zelaya, who was ousted from power and forced into exile in 2009, has signed an agreement with his successor, Porfirio Lobo, which will allow him to return to the country.
The accord also paves the way for Honduras' re-entry into the Organisation of American States (OAS).
Honduras was expelled from the OAS after Mr Zelaya was removed from power.
The accord was negotiated by the Colombian and Venezuelan presidents.
Mr Zelaya and Mr Lobo smiled and shook hands as they signed the agreement in the Colombian city of Cartagena.
Not many details are known of the accord so far, but Colombian President Juan Manuel Santo said on his Twitter account that it "implies the return of Zelaya to Honduras and its return to the OAS".
And Venezuelan President Hugo Chavez, speaking from Venezuela where he is recovering from a knee injury, said his country would be monitoring the accord's implementation very closely.
Mr Lobo said he was "very happy to be signing a document which will permit us to normalise relations between Honduras and all American countries."
Earlier this month, a court in Honduras dropped all corruption charges against Mr Zelaya, paving the way for his return.
Mr Zelaya had described the charges of fraud and falsifying documents as politically motivated.
The former president was bundled out of Honduras by the military in June 2009 after he failed to abide by a Supreme Court order to cancel a non-binding vote on changing the constitution.
His critics said his planned constitutional consultation aimed to lift the one-term limit on serving as president - paving the way for his possible re-election.
Mr Zelaya repeatedly denied this and pointed out that it would have been impossible to change the constitution before his term in office ended.
His removal from office left Honduras politically isolated for several months.
However, a period of relative stability began with the election of Porfirio Lobo as president in elections in November 2009.
Many governments, including the US, have recognised the Honduran government's legitimacy and re-established the ties cut during the height of the crisis.