The deal was signed by President Filipe Nyusi and Renamo leader Ossufo Momade in Maputo's Peace Square and witnessed by former presidents and regional and continental leaders.

Thousands of people applauded as the two leaders showed the signed document, an AFP correspondent said.

The pact brought the curtain down on marathon negotiations initiated by Afonso Dhlakama, the historic leader of the Mozambique National Resistance (Renamo), who died in May last year.

The UN's special envoy on Mozambique, Mirko Manzoni, said it was a "truly historic day."

"This agreement will bring ultimate peace in a country that has seen enough suffering," he declared.

The deal comes just two months before general elections on October 15 that the ruling Frelimo party, the dominant political force for more than four decades, is expected to win.

Renamo unleashed a civil war against the Frelimo government shortly after independence from Portugal in 1975.

The brutal conflict lasted 16 years and left around a million people dead.

The rebel movement then entered politics after a 1992 peace pact was signed in Rome, paving the way for multi-party elections in 1994.

Renamo lost that vote and subsequent elections and became the official opposition party.

But in October 2013, the party renounced the 1992 peace deal after the military raided its bush camp in central Sathundjira.

Clashes erupted again between government forces and Renamo soldiers, lasting until 2016.

On August 1, the two rivals signed a precursor accord in Gorongosa National Park under which they formally agreed to end military hostilities.

"This agreement will be successful because it is peace made by Mozambicans and for Mozambicans. A break with the past," Manzoni predicted.