Instead a scaled-down version of the deal was signed by Burundian President Buyoya and 13 of the 19 warring parties.
The AV-Intwari and PRP signed the deal after Nelson Mandela condemned representatives of the Tutsi minority in Burundi for dashing hopes of settling the country's seven-year old civil war.
"They wanted to reopen almost everything... sabotaging the agreement," Mr Mandela said in a fiery speech.
All seven Hutu parties involved in the Arusha talks signed, but not the two main Hutu rebel groups.
However, one of them (the FDD) has said it supports the accord.
President Bill Clinton, who joined several regional heads of state to witness the signing, said it would have been better if they had signed up to a deal now rather than wait for more people to be killed.
Instead a scaled-down version of the deal was signed by Burundian President Buyoya and 13 of the 19 warring parties.
Tutsis blamed
Mr Mandela, the chief mediator in the peace talks, said some groups were promoting their own self-interest rather than doing what was right for the people of Burundi.
"Some of those leaders are men of honour, they are going to sign today," Mr Mandela said at the signing ceremony.
"Another group, mainly the Tutsi minority which represents 14% of the population, forgot about the agreement," he said.
The seven-year conflict between Hutus and Tutsis in Burundi has claimed an estimated 200,000 lives.
"I do think it is absolutely certain that if you let this moment slip away it will dig the well of bitterness deeper and pile the mountain of grievances higher," Mr Clinton told the delegates.
"I hope you will go home to Burundi not as prisoners of the past but builders of the future."
The comprehensive accord
Correspondents say that the redrafted Burundian peace document provides only a framework for an eventual deal.
The original plan was intended to provide for:
Many Tutsis, who dominate politics and the military despite being in the minority of Burundi's population, are concerned that a democratic solution would lead to Hutu domination.
Heads of state who arrived in Arusha were kept waiting in the hall as frantic last-minute negotiations continued into Monday afternoon.
The presidents of Tanzania, Uganda and Rwanda were among the dignitaries present.
Among the points of disagreement are who will lead the country during a transitional period and exactly when a ceasefire would come into effect.
More fighting around the Burundian capital, Bujumbura, was reported as recently as Monday.