Scotland's NHS workers will be paid a 2.5% pay award from next month.
Nicola Sturgeon said she "greatly valued" NHS staff
Health Secretary Nicola Sturgeon confirmed the deal, which will be backdated to April.
The settlement is to be paid in full, rather than the staged increase recommended by Chancellor Gordon Brown for health workers in England.
Ms Sturgeon, who addressed the NHS Scotland conference in Glasgow, said the pay award would affect about 140,000 NHS staff.
The rise, which was originally agreed by the previous administration, will take effect from July to allow for the conclusion of current UK level union negotiations.
Ms Sturgeon paid tribute to NHS staff and said she was "concerned" to find the recommended award had not been implemented when she took office in May.
Announcing the deal she said: "I hope that this decision demonstrates that I greatly value the commitment, dedication and professionalism of NHS Scotland staff."
"There is a need to effect a balance between the natural desire of unions to ensure that their members receive agreed pay rises as soon as is practically possible and the need to take account of the fact there are still unresolved pay discussions affecting a significant number of NHS Scotland staff at UK level."
But Glyn Hawker, from the health workers' union Unison, said that although the pay rise in Scotland was better than in the rest of the UK, it was still a "low level" award.
The executive will press ahead with the pay settlement
She said: "The Scottish Executive is party to the UK NHS negotiations and pay review body and the unions have already made it clear in that forum that we need an improved pay offer."
"It would be unfair to pay one set of NHS staff ahead of others.
"Any attempt to unilaterally impose a disputed pay deal would send out the wrong signals to NHS staff in Scotland."
The health secretary also disclosed her intention to publish a new health blueprint by the end of the year.
Before the conference Ms Sturgeon said that she plans to have talks with GPs about how to make their services more user-friendly and flexible.
And she did not rule out renegotiating GP contracts which allowed doctors to work fewer hours outside normal hours.