Both sides are pleased with the deal
The US and South Korea have reached a free trade agreement after 10 months of intensive talks.
The deal, which requires legislative approval, is the largest the US has signed since the 1992 North American Free Trade Agreement.
Both countries were keen to reach an agreement, believing it will boost trade and economic growth.
However, rice imports will not be included in the deal after Seoul objected to opening up its market.
Fears that Korean farmers could be harmed by the abolition of rice tariffs led to nationwide protests against trade liberalization over the past few months.
The BBC's Charles Scanlon in Seoul said a deal was reached with only minutes to spare after a marathon session of talks.
There was intense pressure to close a deal because President George W Bush's Trade Promotion Authority, a so-called "fast track" power, ends on 1 July, and any agreement had to be reached 90 days beforehand - by the end of Sunday.
The special power enables Mr Bush to send trade pacts to Congress for a straight yes or no vote, excluding any amendments.
Negotiations were hampered by differences over various industry sectors, especially those in vehicles and agriculture.
But in a letter to Congressional leaders, President Bush confirmed that an agreement had been reached.
KEY ELEMENTS OF THE DEAL
Cars: Korean firms such as Hyundai and Kia will get more access to US consumers
Technology: Korean TV manufacturers and mobile phone firms may benefit from lower taxes
Agriculture: The deal could hit Korean farmers as duties on imported beef are scrapped. But rice imports are excluded
The chief US negotiator said he was disappointed that rice had been excluded from the eventual deal but added he thought further liberalization would take place over time.
"At the end of the day I think we resolved that the benefits to be gained from this FTA were so substantial that it was a deal that was worth doing," said Karan Bhatia.
South Korean trade minister Kim Hyun-chong described the agreement as the "most important event" between the two countries since their signing of a military alliance in 1953.
The Federation of Korean Industries, which represents Korea's largest companies, welcomed the agreement saying it would promote the two countries' economic interests.
Trade between the two countries totalled $72bn (£37bn) in 2005, and is expected to increase about 20% as existing economic barriers are scrapped.
The negotiations were long and protracted and raised heated passions on both sides.
Koreans are worried about their farmers losing their jobs
Hundreds of South Koreans have protested against the deal, arguing that a glut of US imports would make Korean businesses uncompetitive and threaten their livelihoods.
One protester set fire to himself close to the Seoul hotel where the talks have been taking place, while a number of opposition politicians have gone on hunger strike in protest at the proposed move.
But President Roh Moo-Hyun said there is majority public support for the deal despite the protests and predicted parliament would pass it.
He said Seoul will start discussions over free trade with the European Union by June.
The Bush administration has sought to conclude bilateral free trade agreements with key allies in Asia.
It agreed a deal with Singapore in 2003, although a similar agreement with Malaysia has been delayed after the two sides failed to reach a consensus on access to key sectors such as banking and car production.