The agreement calls for the establishment of a joint monitoring committee to oversee troop activities and the development of a plan to resettle people displaced by the fighting to safe areas.
General Sumlut Gun Maw of the Kachin Independence Army said the conditions were not yet right for a complete halt to the fighting, according to The Irrawaddy news magazine.
"Even though we did not sign a ceasefire, we can work to reduce and control fighting on the ground," it quoted him as saying.
According to the government, there are nearly 43,000 displaced people in 106 camps in government-controlled areas, and more than 8,000 in areas controlled by the Kachin Independence Organisation(KIO). The KIO says there are more than 10,0000 in the area it controls.
The Kachin are among several minority groups fighting for independence or greater autonomy in the multi-ethnic country.
The agreement was signed after three days of high-level talks in Myitkyina, the capital of Kachin state.//DPA