The US has agreed to Japanese proposals to relocate a military base on Okinawa.
Okinawans have long complained about the presence of US bases
Details of the move have yet to be released, but Japanese media reports said the air base would be moved from Futenma to Camp Schwab, near Henoko.
The US had previously favoured a controversial plan to build a new base on a nearby coral reef.
The decision to move the Futenma base was taken 10 years ago, after protests from residents over the rape of a local schoolgirl by three US servicemen.
"The US side, taking into consideration the importance of the Japan-US alliance... have accepted the most recent Japan Defence Agency proposal and plan," US Deputy Under-secretary of Defence Richard Lawless said.
Japan's Minister of Defence, Yoshinori Ono, said: "It was a very long way... but we managed to willingly reach an agreement."
Japan's Foreign Minister, Nobutaka Machimura, said the two countries had also agreed to move "thousands" of US marines out of Okinawa, but did not give further details.
Talks on relocating the base had been a stumbling block in negotiations on redeploying the 37,000 US troops based in Japan, more than half of which are on Okinawa.
Environmental activists had strongly opposed the original US proposal to build a base on the Henoko coral reef, which is home to the rare dugong sea creatures, also known as sea cows.
For its part, the US had previously objected to the alternative proposal of moving to Camp Schwab, citing operational reasons.
Reports say a compromise has now been reached under which Japan has agreed to allow the US to extend the Camp Schwab base offshore.
The issue had been complicated by the reluctance of many Okinawa communities to host US military bases, over concerns about crime, accidents, noise and environmental pollution.
Other residents support the US presence, arguing that the bases bring jobs and income to one of Japan's poorest provinces.
The resolution of the dispute paves the way for US President George Bush to visit Japan in November.
The US sees the Okinawa bases, located within striking distance of China and the Korean peninsula, as essential for its security strategy in Asia and the Pacific region.