"We agreed to reactivate the 2008 Italian-Libyan friendship treaty," said Libyan Presidential Council Foreign Minister Mohamad Siyala in a joint press conference in Tripoli with Italian counterpart Enzo Moavero Milanesi.
He hailed the agreement reached during his first visit to Tripoli as "significant and promising".
The original treaty was signed by Muammar Gaddafi and Italy's then prime minister Silvio Berlusconi.
The deal was suspended in March 2011, after the start of the revolution. The original treaty envisaged 5 billion euros of Italian investment in Libya as compensation for colonization by Rome.
In exchange, Libya would work to stop illegal migrants embarking from its shores and receive those sent back to it.
In Tripoli on Saturday the two ministers did not say if the text of the reactivated treaty had been amended.
Libya "shares with the European Union the responsibility and the duty to deal with migrants", said Milanesi.
"Cooperation between Libya, Italy and the EU is essential to resolve the immigration question and avoid human tragedies", he added.