The Memorandum of Understanding finalised after weeks of intense negotiations, provides for the inspection of all NATO cargo in the port city of Karachi and at the border crossing points of Chaman and Torkham, officials said.
The MoU states that lethal equipment for NATO forces, including weapons and ammunition, cannot be transported through Pakistan. However, Pakistani will allow the movement of arms shipments meant for the Afghan security forces through its territory.
Richard Hoagland, the American Charge d'Affaires, and Pakistan's Additional Defence Secretary, Rear Admiral Farrokh Ahmad, signed the MoU during a function at the defence ministry in Rawalpindi.
Pakistani officials told reporters that the MoU would safeguard the country's national interests. Hoagland said the US would release $1.1 billion of aid for Pakistan from the Coalition Support Fund.
Islamabad had closed all supply routes to Afghanistan after a cross-border NATO air strike killed 24 Pakistani soldiers last November. It ended the seven-month blockade after the US apologised for the attack earlier this month.
The US welcomed the signing of the MoU, saying the measure would boost efforts to usher in stability in Afghanistan.
A statement issued by the US embassy said the MoU would also cover the transit of cargo from Afghanistan. "This MoU is a demonstration of increased transparency and openness between our governments, in respect of Pakistan's sovereignty as requested by the Pakistani parliament. It also underscores our shared commitment to support Afghanistan and regional stability," the statement said.
The US said it is "committed to working together with Pakistan toward these goals on the basis of mutual interests and mutual respect".
The two countries should have a relationship that is "enduring, strategic and carefully defined, and that enhances the security and prosperity of both our nations and the region", the statement said.
Pakistan's cabinet approved the draft of the MoU last week after several rounds of talks between senior officials of the two countries. The MOU will replace existing arrangements for transporting NATO supplies that were reportedly based on a "verbal understanding".
US Embassy spokesman Mark Stroh told the media that the US had been given an understanding that the MoU was in line with recommendations made by Pakistan's parliament for new terms of engagement with the US and NATO.
During the negotiations with the US, Pakistan tried to introduce provisions for demurrage and charges for special services but had to drop them because of the reluctance of the Americans to pay any new fee.
The MoU states that only two routes through Khyber-Pakhtunkhwa and Balochistan provinces will be used by NATO containers and tankers.
NATO supply vehicles can cross into Afghanistan only through the Chaman and Torkham border crossings. Containers on the southern route will travel from Bin Qasim port in Karachi to Chaman in Balochistan province.
On the northern route, containers will travel from Karachi to Torkham in the northwest.
The MoU said no tax or duty will be charged on the containers though commercial carriers will have to pay fees. New fees can also be introduced for the quick transfer of cargo.
The MoU further said that no warehouses or storage facilities will be provided for American goods and no new no-objection certificates will be required for transit.
Pakistan will be allowed to stop the transit of goods that fall outside the parameters of the MoU. Pakistan will also ensure the security and quick transfer of cargo and keep the US government informed about monitoring and transit points for supplies.
Containers travelling to Afghanistan will be bound to return via Pakistan.
Pakistan's defence ministry will act as a central coordination authority and review daily operations and other matters related to the supply routes.
Two monitoring offices for NATO supplies will be set up at the Pakistani Defence Ministry and the US Embassy.
Secretary Defence Asif Yasin will be the coordination officer from the Pakistani side. Officials from both countries will meet once every two months to evaluate the implementation of the MoU.
According to the pact, any misunderstanding will be resolved through bilateral discussions without any third-party involvement.
The MoU will be valid till December 31, 2015 and can be extended for a year at a time after consultations between the two sides.
Both countries will have to inform each other in writing if they want to discontinue the MoU. Officials said the MoU has a provision for other NATO or International Security Assistance Force countries to accede to the arrangement.