The Tripartite Free Trade Area (TFTA) deal, which must still be fine-tuned and ratified, caps five years of talks to set up a framework for preferential tariffs to ease the movement of goods in an area home to 625 million people.
Analysts it could have an enormous impact on African economies account for only about two percent of global trade despite strong growth.
Egyptian President Abdel Fattah al-Sisi, President Robert Mugabe of Zimbabwe and President Omar al-Bashir of Sudan were among those who signed the pact at a summit in the Red Sea resort of Sharm el-Sheikh.
"What we are doing today represents a very important step in the history of the regional integration of Africa," Sisi said as he opened the summit.
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He wrapped up the meeting saying: "We have told the word today... Of our desire to adopt practices that are necessary to increase trade among ourselves... We will do whatever is possible to activate this agreement."
World Bank President Jim Yong Kim said the TFTA would allow Africa "to make tremendous progress and move the entire continent forward."
The deal will integrate three existing trade blocs -- the East African Community, the Southern African Development Community and the Common Market for Eastern and Southern Africa (COMESA) -- whose countries have a combined Gross Domestic Product of more than $1 trillion (885 billion euros).
"The geographical area covers the Cape (of Good Hope) to Cairo... The agreement paves the way for a continental free trade area that will combine the three biggest regional communities," Ethiopian Prime Minister Hailemariam Desalegn told the summit.
And Mugabe said the deal will create a "borderless economy" that would rank 13th in the world in terms of GDP.
"The establishment of TFTA will bolster intra-regional trade by creating a wider market" that will "increase investment flow... And enhance regional infrastructure development," a final statement said.