Lithuania will pay more than £32 million in compensation for assets that the Nazis stole from the Jews during the Holocaust.
The agreement, backed by a majority of the Lithuanian parliament at a vote on Tuesday, has been sought for years by Jewish organisations. The US state department praised it as "an important step towards historical justice and reconciliation".
The money, which will be paid next year and the year after, will be placed into a special fund for Lithuania's Jewish community and be used for social and educational projects, as well as for pensions for those who lived through the Holocaust.
Only five per cent of the Lithuanian Jewish community survived the Holocaust. The population now stands at about 5,000.