Russia has agreed to a deal that cancels 90% of Afghanistan's Soviet-era debt, worth about $10bn (£4.9bn).
The Soviet army left Afghanistan in 1989
Correspondents say the agreement is a significant boost for war-ravaged and poverty-stricken Afghanistan.
Russia is by far the biggest creditor nation for Afghanistan, mostly for weapon sales during the Soviet era.
The Soviet occupation of Afghanistan resulted in the death of about one million Afghans and lasted from 1979 to 1989, when the Red Army withdrew.
The agreement between Russian Finance Minister Alexei Kudrin and his Afghan counterpart, Anwar-ul Haq Ahadi, was signed in Moscow.
Correspondents say that the move is a major gesture of support for the Afghan government, which is trying to assert its authority - with the help of Nato and US-led forces - over Taleban rebels.
'Drawn a line'
Mr Kudrin said Russia wanted to "support the government of Afghanistan in building a new life and stabilising the political and economic situation in the country".
He said that Russia would actively participate in helping the economy of Afghanistan.
"This is a historic day for our two countries," he said. "Today we have drawn a line under many years of discussion on regulating the debts."
The Afghan government has welcomed the debt relief, which it said would help "the stabilisation of Afghanistan".
"I look forward to greater cooperation with Russia. We would like further economic cooperation with Russia," Mr Ahadi said.
"We think Russian companies have the competitive advantage and that they can compete in Afghanistan's market."