Cambodia and Thailand agreed on Friday to withdraw the remaining troops on their disputed border to avoid a repeat of last year's armed clashes near a 900-year-old Hindu temple.
Cambodian Prime Minister Hun Sen, speaking to reporters after meeting Thai Defence Minister Prawit Wongsuwan, said they agreed to jointly demarcate the jungle-clad area where four soldiers died in a firefight last October.
"There will be no more military confrontation in that area," Hun Sen said, adding the two neighbours would work together to develop the area for tourism.
"I told the Thai delegation that this is an historic moment. We have solved the problems today so there will be no troubled legacy for our next generations," Hun Sen said.
Prawit, who was accompanied on the trip by Thailand's top military brass, told reporters: "Everything is OK. No problems."
One Thai and three Cambodian soldiers died in last year's exchange of rifle and rocket fire, which both sides accused the other of starting.
The Preah Vihear temple, or Khao Phra Viharn as it is known in Thailand, sits on an escarpment that forms the natural border between the two countries and has been a source of tension for generations.
The International Court of Justice awarded it to Cambodia in 1962, but the ruling did not determine the ownership of 1.8 square miles (4.6 sq km) of adjoining scrubland, leaving considerable scope for disagreement.