What's the story?
The deal ends six weeks of military conflict in the South Caucasus region that has killed over 1,200 and left thousands displaced, according to regional authorities.
The new peace deal was signed by Russian President Vladimir Putin, Azerbaijani President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan.
The terms include:
- A complete ceasefire and cessation of all hostilities from midnight Moscow time on Tuesday. Both sides will maintain positions in the areas that they currently hold. This is a significant gain for Azerbaijan, as it has reclaimed 15 to 20 per cent of its lost territory during the recent conflict, the AFP reported.
- About 2,000 Russian peacekeepers will be deployed along the line of contact in Nagorno-Karabakh. They will remain there for a period of five years.
- Refugees and internally displaced persons will return to the region and the two sides will exchange prisoners of war and other detained persons, as well as bodies of those killed in the fighting.
- A new transport corridor will be opened through Armenia, linking Azerbaijan and its western exclave of Nakhchivan. The corridor will be under Russian control.
Why it matters?
Nagorno-Karabakh is a small region that straddles western Asia and Eastern Europe. It is internationally recognised as part of Azerbaijan, but most of it is controlled by Armenian separatists and the majority of its population is ethnically Armenian.
In the late 1980s the two nations went to war for control of the area - a war that escalated further after both declared their independence from the Soviet Union.
Armenia's claim to the region has not been recognised by any United Nation members, all of whom still consider the disputed areas as under Azerbaijani jurisdiction.
Following decades of relative peace in the region, fighting escalated in September as both sides blamed each other for deadly attacks in the area.
The dispute attracted regional and Western concern as the area is crossed by pipelines carrying oil and gas from the Caspian Sea to global markets, reported The Guardian.
Russia has long played a role in the conflict as a major regional player and one of the three co-chairs of the Minsk Group, the diplomatic effort to mediate the Nagorno-Karabakh dispute. The group includes the United States and France.
Soon after Armenia's PM Pashinyan announced the "painful" deal, crowds started protests in the Armenian capital of Yerevan, accusing the government of betrayal as they believed that fighting should have continued.
In contrast, Azerbaijan's President Aliyev said the agreement was of "historic importance" and there was a mood of celebration in the country's capital Baku, where crowds broke out in chants, waved flags and sang the national anthem, reported the BBC.
The agreement makes no mention of the future status of the Armenian-populated areas of Nagorno-Karabakh or how future negotiations will take place, reported the AFP.
The question now is: Will the deal hold?
Since September, multiple ceasefire attempts have failed. Political opposition to the deal in Armenia could impact the long-term success of the agreement.