The agreement in principle, signed by French Industry Minister Christian Estrosi and Libyan officials in Tripoli, concerns the economy and the energy sector.
It means that negotiations can open on the construction of a nuclear power station, an idea which was floated when President Moamer Kadhafi visited Paris in 2007 and pursued unsuccessfully by French company Areva in 2009.
Libya has already signed nuclear agreements with Ukraine, Russia and Canada.
French firms also want to gain access to Libya’s massive unexploited oil reserves, as do the rest of the world’s oil companies. France has a 1.3 billion-euro trade deficit with Libya, mainly due to oil imports.
Venezuelan President Hugo Chavez met Kadhafi on Friday when he stopped over in Tripoli as part of a tour which will take him to Iran and Syria.