The issue has soured relations between South Korea and Japan for decades.
The Japanese military used Korean, Chinese, Taiwanese, Dutch and Australian women as sex slaves for soldiers during World War II.
Not everybody is happy with the deal but on an official level, state representatives sounded optimisticl.
"The honour and dignity of many women was hurt, with the involvement of the imperial Japanese army during wartime,” Japanese Foreign Affairs Minister Fumio Kishida said in Seoul. “The Japanese government feels responsibility for that."
Kishida added that Japanese Prime Minister Shinzo Abe will make an official apology and “express deep remorse for all the women who suffered from psychological and physical wounds that cannot be healed".
Kishida said Tokyo offers what he called a “heartfelt apology" and a one-billion-yen (eight-million-euro) payment.
While South Korean Foreign Affairs Minister Yun Byung-Se said that the “the issue be now resolved finally and irreversibly ….. on condition the Japanese government steadily carries out the steps it has agreed upon," reactions from people directly concerned were negative.
Only 46 of more than 200,000 comfort women are still alive and they are not happy with the deal.
“The money offered is too little,” says professor Roh Jong Sun of Yonsei University. “In today’s Korea you can buy one condominium, that's all. There were up to 200,000 women involved in sex slavery by the Japanese army. So for me it is disgusting to hear.”
Abe was reluctant to admit these "crimes against humanity", he insisted.
"Sometimes one woman had to deal with 50 Japanese soldiers on one day. After 70 years it is time that Japan admits that these are crimes against humanity. It is a point that should have been included in the agreement between the Japanese and Korean ministers. But this line did not appear.”
After the statement was issued, victims said they were not treated with respect and showed their dissatisfaction with the Japanese government.
“One woman who was involved in sex slavery said that Prime Minister Abe of Japan should come and visit their home,” says Roh. “They are living together in one compound now. So they expect Prime Minister Abe to come and personally express his regrets and apology as head of the Japanese government.”
Japan has long maintained that the dispute was settled in a 1965 agreement when Tokyo established diplomatic ties with Seoul and made a payment of 750-million-euro in grants and low-interest loans to South Korea.
Seoul has said the 1965 treaty did not cover compensation for victims of wartime crimes such as comfort women and did not absolve the Japanese government of legal responsibility.
As part of the agreement, Seoul will try to relocate a statue symbolising comfort women which currently stands in front of the Japanese embassy.