"Under the terms of this treaty the United Kingdom will agree that Mauritius is sovereign over the Chagos Archipelago, including Diego Garcia. At the same time, both our countries are committed to the need, and will agree in the treaty, to ensure the long-term, secure and effective operation of the existing base on Diego Garcia which plays a vital role in regional and global security," the joint statement said.
Mauritius will now be free to implement a program of resettlement on the Chagos Archipelago, except for Diego Garcia.
The UK will create a new trust fund and provide other support for the benefit of Chagossians, the statement said.
The two countries said the treaty will open "a new era of economic, security and environmental partnership" between the two nations.
To enable the partnership, the UK will provide a package of financial support to Mauritius, including an "indexed annual payment for the duration of the agreement" and the "establishment of a transformational infrastructure partnership."
The deal was reached with the full support and assistance of the United States and India, the statement added.