The loyalist paramilitary Ulster Defence Association has promised to end all violence and work towards complete disarmament.
The announcement was made at a ceremony in north Belfast
It follows Northern Ireland Secretary Paul Murphy's announcement on Friday that the government was prepared to again recognise the UDA's ceasefire.
A statement from the paramilitary group was read on Sunday at a loyalist commemoration by Tommy Kirkham of the Ulster Political Research Group, which provides political analysis for the UDA.
Masked men were among a crowd of more than 2,000 people at the loyalist Rathcoole estate on the outskirts of north Belfast which heard the statement.
Mr Kirkham said: "From today we are prepared to move into a process.
"Our commitment to that process will be to work towards a day when there is no longer a need for a UDA and a UFF (Ulster Freedom Fighters)."
Mr Kirkham said that the UDA would cease all violent activity from Sunday onwards.
"We have agreed with our government to enter into a process which will see the eradication of all paramilitary activity," he said.
"We will engage with the decommissioning commission, though we must be satisfied there is no longer any threat to our community from without or within.
"Furthermore, we need to be certain that this latest attempt to find a political settlement is for real."
He said the UDA's strategy "will become one of community development, job creation, social inclusion and community politics".
However, he indicated the UDA would adopt a wait and see approach to republicanism, and there were indications that it may return to violence if the current political process failed.
"History tells us all that whenever the need arises or there is a threat to our very existence, there will always be some form of defence association," he said.
The UDA's ceasefire will be formally recognised from midnight onwards following Mr Murphy's decision.
Mr Murphy said he believed that Northern Ireland's biggest loyalist paramilitary group was ready to move away from violence.
Masked men were among the 2,000-strong crowd
Sinn Fein's Alex Maskey said he welcomed the move but understood why many would be sceptical about it.
"We are faced with a dilemma here, because in the first instance we want them to stop the kind of activity they are involved in," he said.
"We have heard all these statements before, and there is a huge dose of scepticism out there.
"A number of families who have even recently been victimised by the UDA and their colleagues are very sceptical about this announcement.
"I hope and my party hopes that it is successful."
'Actions, not words'
SDLP assembly member Alban Maginness said the UDA must be judged on actions rather than words.
"For nationalists and ethnic minorities who have been repeatedly attacked by the UDA, this is the only test that matters," he said.
The North Belfast MLA added: "To wind up or to be locked up. That is the message the UDA needs to hear."
Government recognition for the UDA ceasefire was removed in October 2001 because of its involvement in violence.
Senior members of the UDA leadership held talks with Mr Murphy at Stormont last week.
Since that meeting, senior government officials and loyalists have remained in contact.
The UDA was a "specified" organisation for more than three years, despite its declaration of a new ceasefire in February this year.
The UDA's involvement in feuding, racketeering and other paramilitary activity meant that the government did not recognise its cessation.
Paul Murphy based his decision on a number of factors
Mr Murphy said his decision to "de-specify" the UDA and the related Ulster Freedom Fighters (UFF) was based on a number of factors.
These included its re-stated commitment to its ceasefire and the organisation's "generally constructive approach" during this year's marching season.
The secretary of state also said that there had been some reduction in paramilitary activity by its members over the past six months, as reflected in the recent report by the ceasefire watchdog, the Independent Monitoring Commission.
However, he said that the UDA continues to be involved in "a range of unacceptable activities which must be brought to an end".