Germany has agreed to spend 300m euros ($354m) to help Russia dismantle 120 Soviet-era nuclear submarines.
Rusting Soviet-era subs are said to be a radiation hazard
The six-year deal was signed at a German-Russian summit in the Urals.
Russia has dozens of decommissioned nuclear submarines rusting near Murmansk in the Arctic north - a problem that alarms its neighbours.
A safe storage site will be set up to house reactor sections currently floating dangerously in a bay near Murmansk, officials say.
The project is part of an initiative launched by the Group of Eight (G-8) countries at their summit in Canada last year, aimed at preventing the spread of weapons of mass destruction.
According to the German trade ministry, Russia has already dismantled about 40 Northern Fleet nuclear submarines, apart from their reactor sections, which are floating in Saida Bay.
Of 103 nuclear submarines still to be dismantled, 76 still contain a nuclear reactor, the Russian atomic energy ministry says.
The sinking of the Kursk in August 2000 with the loss of 118 lives heightened international concern about the environmental threat from Russia's nuclear submarines.
The Kursk plunged to the bottom of the Barents Sea after an explosion in a torpedo compartment.