Trump said in a social media post that the ceasefire would start at 5pm EST (7am AEST on Friday), aiming to halt a conflict between Israel and the Iran-aligned Lebanese group Hezbollah that was reignited by the US-Israeli war against Iran.
He said he had held "excellent conversations" with Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun.
"These two Leaders have agreed that in order to achieve PEACE between their Countries, they will formally begin a 10 Day CEASEFIRE at 5 PM EST," he said.
"Both sides want to see PEACE, and I believe that will happen, quickly!"
Trump said he had directed US Vice President JD Vance, Secretary of State Marco Rubio and Chairman of the Joint Chiefs of Staff Dan Caine to work with the two countries to achieve lasting peace.
The war with Iran spilt into Lebanon on March 2, when Hezbollah opened fire in support of Tehran, prompting an Israeli offensive in Lebanon 15 months after the last major conflict.
European Commission President Ursula von der Leyen welcomed the ceasefire announcement, saying on X: "This is a relief, as this conflict has already claimed far too many lives."
Thousands of people have been killed, mostly in Iran and Lebanon, since US-Israeli attacks on Iran began on February 28, triggering Iranian air strikes on Iran's Gulf neighbours and reigniting the Israel-Hezbollah conflict.
Soaring energy costs have rattled investors and policymakers globally since Iran effectively closed the Strait of Hormuz, through which a fifth of the world's oil and gas supply flows.
Closure of the strait has caused the worst oil price shock in history and forced the International Monetary Fund to downgrade its outlook for the global economy, warning prolonged conflict could push the world to the brink of recession.
But hopes of a deal between Iran and the United States have been growing, with a two-week ceasefire in force.
A security source said a Pakistani mediator had made a breakthrough on "sticky issues", although Tehran said the fate of its nuclear program had not been resolved. Trump has said the accord would open the Strait of Hormuz.
Pakistan's army chief, Field Marshal Asim Munir, an important figure in mediation efforts, arrived in Tehran on Wednesday to try to prevent a renewal of the conflict after talks in Islamabad that ended without a deal.
A senior Iranian official told Reuters on Thursday the trip had led to greater hopes for a second round of talks and an extension of a two-week
US Defense Secretary Pete Hegseth said troops were poised to restart combat operations if a deal was not reached with Iran.
"We are reloading with more power than ever before, and better intelligence," Hegseth told a Pentagon briefing.
"We are locked and loaded on your critical dual-use infrastructure, on your remaining power generation, and on your energy industry. We'd rather not have to do it."
But a security source told Reuters a deal was closing in and that the US wants a breakthrough before the ceasefire expires next week. Washington is offering to lift sanctions and unfreeze billions of dollars' worth of Iranian assets, he said.
Iran will open the strait only if a permanent ceasefire is reached and there are United Nations guarantees that the US and Israel will not attack again in future, he said.
"We hope that the field marshal will have a draft in his hand when he flies out of Tehran," the source said.
Stock markets have rallied strongly in recent days on expectations of a swift resolution to the fighting, with global equities vaulting past their previous all-time highs in trading on Thursday.
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