US Transportation Secretary Anthony Foxx and Cuban Transportation Minister Adel Yzquierdo Rodriguez signed the deal in a ceremony at Havana's Hotel Nacional.
US airlines can now start bidding on routes for as many as 110 US-Cuba flights a day -- more than five times the current number. All flights operating between the two countries today are charters.
The agreement allows 20 regular daily US flights to Havana, in addition to the current 10-15 charter flights a day. The rest would be to other Cuban cities.
"It represents a critically important milestone in the US effort to engage with Cuba."
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Yzquierdo Rodriguez said "the adoption of this memorandum is an important step that will soon permit the establishment of regular flights between the United States and Cuba."
Barring other major announcements, the restart of commercial flights will be the most significant development in US-Cuba trade since Presidents Barack Obama and Raul Castro announced in late 2014 that they would begin normalising ties after a half-century of Cold War opposition.
The Obama administration is eager to make rapid progress on building trade and diplomatic ties with Cuba before the president leaves office. The coming weeks are seen as particularly crucial to building momentum ahead of a trip he hopes to make to Havana by the end of March.
Commercial flights could bring hundreds of thousands more US travelers a year and make the travel process far easier, with features such as online booking and 24-hour customer service that are largely absent in the charter industry.
US visitors to Cuba will still have to qualify under one of the travel categories legally authorised by the US government.
Tourism is still barred by law, but the number of legal reasons to go to Cuba, from organising professional meetings to distributing information to Cubans, has grown so large and loosely enforced that the distinction from tourism has blurred significantly.