The deal gives autonomy and free elections to Aceh - which lies at the northern tip of the island of Sumatra - in exchange for the rebels disarming.
The agreement, which was signed in Geneva, has been brokered by mediators from the Henry Dunant Centre.
They say the deal represents the best chance the two sides have had to settle their 26-year conflict, which has left about 10,000 people dead.
But a BBC correspondent in Geneva says that, with fighting still continuing in Aceh almost daily, there are doubts the peace agreement will hold on the ground.
Muted reaction
In Aceh itself, there have been few signs of celebration.
Most people in the mainly Muslim province are paying more attention to observing the Eid al-Fitr festival than the peace pact, Reuters news agency reports.
No big festivities have been planned to mark the treaty - and while the Government in Jakarta is optimistic the signing will go ahead, the rebels are more sceptical.
"(Signing) the peace pact fully depends on the outcome of the dialogue beforehand," a spokesman for the separatist Free Aceh Movement (Gam) said last week.
Under the terms of the agreement, the rebels are supposed to give up their weapons and place them in designated sites.
Terms of the deal
Immediate ceasefire
Free elections in 2004 to establish an autonomous government, but no independence
New provincial government allowed to keep 70% of fuel revenues
Rebels must disarm in designated areas
But how and when to disarm has been a major bone of contention during negotiations.
After years of brutal conflict and a catalogue of human rights abuses, the level of mistrust on both sides is impossible to over-estimate, says a BBC correspondent in Jakarta.
But both sides stand to gain from the agreement.
Indonesian President Megawati Sukarnoputri has made solving the Aceh problem one of her top priorities, and if she succeeds it could significantly boost her chances of re-election in two years' time.
For the rebels, the deal falls short of full independence, but offers the chance of free elections for a provincial government in 2004 - a government which will be allowed to keep up to 70% of Aceh's substantial oil and gas revenues.
US pressure
European negotiators have worked for two years to bring about the current peace deal.
But the Indonesian Government has also been under pressure from Washington - which wants Indonesia to concentrate on the war against terrorism.
A group of international figures, who have been helping to negotiate the accord, will be present for Monday's signing.
They include retired US General Anthony Zinni, former Thai Foreign Minister Surin Pitsuwan, and Budimir Loncar, Yugoslavia's last foreign minister at the time of the country's break-up in 1992.