The agreement was signed by the Yugoslav President Vojislav Kostunica, the Montenegrin President Milo Djukanovic, and the EU High Representative Javier Solana. It meets the expectations of the EU that endeavoured to keep Serbia and Montenegro together.
The Montenegrin independence referendum, scheduled for May, will be postponed for three years, according to the agreement.
The agreement calls for both republics to adopt new constitutions by June 2002, and to hold new federal elections by this autumn.
The agreement still has to be ratified by the Serbian, Montenegrin and Yugoslav parliaments before coming into force.
