The signing took place during a dinner hosted by French President Emmanuel Macron at the Palace of Versailles following the G7 summit.

Announcing the development on X, Macron said the agreement would help restore stability in the region and pave the way for the reopening of the Strait of Hormuz, a critical global shipping route.

"President Trump signed tonight at Versailles the agreement between Iran and the United States. This agreement paves the way for lasting peace and allows the reopening of the Strait of Hormuz," Macron wrote.

He added that the deal could also help bring down energy prices in the coming months.

Iran confirms signing of memorandum

Iran also confirmed that the document had been signed, describing it as an important step towards ending hostilities.

"The text of the Islamabad Memorandum of Understanding was finalised with the signatures of the presidents -- now it is time to test the implementation of the agreement," Iranian Foreign Ministry spokesman Esmaeil Baqaei said, according to state news agency IRNA.

The formal signing had initially been scheduled to take place in Switzerland on Friday. However, the agreement was finalised earlier than expected. Tehran said that the planned Geneva meeting would still go ahead.

Final deal to be negotiated within 60 days

Under the terms of the memorandum, Washington and Tehran will have 60 days to negotiate the framework of a final agreement.

US officials released the text of the document on Wednesday amid growing calls for transparency after Trump first announced the deal on Sunday.

Officially titled the Islamabad Memorandum of Understanding between the United States of America and the Islamic Republic of Iran, the document calls for an "immediate and permanent termination of military operations on all fronts, including in Lebanon."

Naval blockade to end, shipping routes to reopen

The agreement commits the United States to lifting its naval blockade of Iran within 30 days. During that period, commercial shipping traffic is expected to gradually return to pre-war levels.

The memorandum also states that US forces will withdraw from the vicinity of Iran within 30 days of a final agreement being concluded.

In return, Iran has pledged to use its "best efforts" to ensure the safe passage of commercial vessels and to allow ships to transit without charges for a period of 60 days.

Conflict lasted more than three months

The signing effectively brings an end to a conflict that lasted around 110 days, beginning when the United States and Israel launched strikes on Iran on February 28.

While the memorandum marks a significant breakthrough, both sides will now face the challenge of implementing its provisions and negotiating a comprehensive long-term settlement in the weeks ahead.