Although seen as a critical step toward peace in the war-torn nation, the treaty did not cover the ongoing conflict in the western Darfur region, which has left some 70,000 people dead and 2 million displaced.
Sudanese President Hassan Omer el-Bashir, who called the agreement "a new beginning for the people of Sudan," said it should pave the way for the resolution of problems of war and displacement in Darfur.
"We will embark with dedication to end all acts of hostility there [in Darfur] and move fast to achieve a successful solution which will meet the anticipation of our citizens in that beloved part of our country," he said, according to the United Nations News Agency.
SPLM/A leader John Garang, who should be sworn in as vice president within months, said the agreement brings a new era of equality and justice.
"Sudan for the first time will be a country voluntarily united in justice, honor and dignity for all its citizens regardless of their race -- regardless of their religion -- regardless of their gender," Garang said in his speech.
"Now that the war is ended, I call on all Sudanese people and their political forces to build consensus around this comprehensive peace agreement and use it to end war in other parts of Sudan," he added.
The north-south Sudanese Civil War has killed at least 2 million people, uprooted 4 million more, and forced some 600,000 to flee to neighboring countries, according to the United Nations. Talks to end the war in Africa's largest country have been ongoing since mid-2003.
The agreement requires the Sudanese government to withdraw at least 91,000 troops from the rebel-controlled South within two-and-a-half years. The rebels have eight months to withdraw their forces from northern Sudan.
In addition, Sudan pledged to rewrite its constitution to ensure that Islamic law, called Sharia, is not applied to non-Muslims anywhere in the country.
After an interim period of six-and-a-half years, Sudanese in the South, who mainly practice animism and Christianity, have the right to hold a referendum on whether they should secede, according to Reuters.
The agreement details protocols on sharing legislative power and natural resources, changing the armed forces and administrating three disputed areas in central Sudan.
Kenyan President Mwai Kibaki, whose country spearheaded the mediation efforts, and Ugandan President Yoweri Museveni, the current chairman of the regional Inter-Governmental Authority on Development that sponsored the talks, attended the ceremony, along with Algerian President Abdulaziz Bouteflika, Rwandan President Paul Kagame, Ethiopian Prime Minister Meles Zenawi, Somali President Abdullahi Yusuf Ahmed and Powell.
United Nations Secretary-General Kofi Annan was unable to attend, but offered words of encouragement through an ambassador.
"The real challenge now is for all the parties to show the same commitment, determination and courage in fully implementing the agreement, which will entail equally daunting challenges over a very long period," the U.N. special envoy to Sudan, Jan Pronk, said.
After the signing ceremony, thousands of southern Sudanese danced with President Bashir, who dressed in a civilian brown suit covered in a white cloak symbolizing peace.
"I used to dress in khaki because I am in the army and because there was war," Bashir told the crowd. "Today I am still in the army ... but I'm not wearing khaki because there is no more war."
Aid agencies and the United Nations have allocated large budgets to rebuild the South, which has few paved roads or medical facilities. The United Nations has estimated some 9,000 troops will be required to monitor the agreements.
However, officials worry that the achievement will be overshadowed by the Darfur crisis, which erupted in February 2003. The security situation in the northwest region has worsened in recent weeks and the western insurgents, who have similar demands to the SPLM/A's, have become factionalized, hindering the chances of an early political solution, according to the United Nations.