The Australian Broadcasting Corporation reports that in terms of the agreement, Micronesian leaders have abandoned their demand that current secretary-general of the Pacific Islands Forum (PIF) Henry Puna step down immediately, instead allowing him to serve out his term until 2024.
In return, Puna will be replaced by a Micronesian candidate when his term finishes.
After that, the role will be rotated throughout the three Pacific subregions - Melanesia, Polynesia and Micronesia - in an attempt to prevent a repeat of the dispute which almost saw Micronesian countries quit the forum.
The deal was signed by several senior Pacific leaders after a crucial face-to-face meeting in Suva.
Current PIF chair and Fijian Prime Minister Frank Bainimarama, Samoa's Prime Minister Fiame Naomi Mata'afa, Cook Islands Prime Minister Mark Brown and three Micronesian leaders all took part in the talks.
The agreement will still need to be endorsed at the Pacific Islands Forum leaders' meeting due to be held in Suva in July, but most observers expect that will be a formality.
President of the Federated States of Micronesia David Paneulo said the deal meant that a "big dark cloud hanging over the Pacific" had now "evaporated".
"Just a few days ago, it could have been that we walked away and broke up the entire Pacific family, but the common ground that we reached has kept us together," he said.
Palau's President Surangel Whipps — who led the charge for Micronesia to withdraw from the forum after their candidate for secretary-general was defeated in a tight leadership ballot — said he and his fellow regional leaders were keen to strike an agreement that would allow PIF to stay whole.
"I think the most important outcome is the unity of the Pacific," he said.