The negotiators – from Iran, the US, France, Britain, Germany, Russia and China – clinched the deal at 4:30am in the Geneva Palace of Nations.
The aim of the accord, in effect for six months, is to give international negotiators time to agree on a more sweeping agreement that would ensure Iran’s uranium enrichment programme does not proliferate.
US President Barack Obama hailed the deal as the most “significant and tangible” development with Iran since the estranged countries broke diplomatic ties 34 years ago after the storming of the US embassy in Tehran.
France, a member of the so-called P5+1 group that had expressed the most reservations over Iran’s previous commitment, welcomed the agreement.
"The interim accord reached overnight is an important step in the right direction... towards stopping Iran's military nuclear programme and therefore normalising our ties," French President François Hollande said in a statement.
Iranian Foreign Minister Mohammad Javad Zarif said he hoped the agreement would restore trust between the two countries while again stressing that Iran’s nuclear programme was peaceful.
Under the deal, Iran has agreed to stop enriching uranium beyond five per cent, a level sufficient for energy making but not bomb-making.
UN atomic inspectors will also have additional, unprecedented access to the country’s stockpiles.
In return the deal releases just over just over five billion Euros in Iranian oil sales revenue that has been frozen in foreign banks, as well as several billion more in sanctions relief.