Prime Minister Anthony Albanese and European Commission President Ursula von der Leyen have signed the much-debated deal in Canberra, marking an end to almost a decade of intermittent negotiations.
Under the deal, Australia will remove a five per cent tariff on imports of European products, which hits car-makers like BMW and Mercedes along with producers of goods like fashion products, food and drink.
In exchange, the EU will allow expanded imports of Australian products, including beef and lamb.
The deal marked a "defining moment" in Australia's relationship with the European Union, Mr Albanese said.
"This is a significant moment for our nation as we secure an agreement with the world's second-largest economy," he told reporters in Canberra.
A key dispute in negotiations was over the use of product names like prosecco, which European winemakers wanted exclusive access to.
Under the deal, Australian producers will be allowed to continue calling the popular sparkling wine "prosecco" for domestic sales, but the term will be phased out over 10 years for foreign exports.
Australia and Europe have also agreed to increase military cooperation, including on cyber security and counter-terrorism, and have also struck a deal to boost research ties.
