Peruvian President Alberto Fujimori hugs Ecuadorean President Jamil Mahuad after signing the peace agreement

BRASILIA, Brazil (CNN) -- Peru and Ecuador signed a historic peace treaty on Monday, ending a 57-year dispute over a slice of Amazon jungle that brought them to war three times.

As dignitaries from three continents looked on, the foreign ministers of the two South American nations signed the accord in Brazil's capital, where most of the peace talks took place.

The treaty sets the boundary on a contested 48-mile (78 km) section of their border in the Andean foothills.

Both countries laid claim to the jungle-cloaked area that was left undefined in the 1942 Rio de Janeiro Protocol that set territorial limits.

Under the pact, the disputed section of the border will follow the heights of the Cordillera del Condor mountain range, as Peru had claimed.

But a hill within Peru's territory called Tiwintza will be granted to Ecuador's government as private property, even though it will remain under Peruvian sovereignty.

That would make ownership of the 250 acres (1-square-kilometer) somewhat comparable to an individual Ecuadoran owning property in Peru. The Peruvian government has 30 months to build a road from Tiwintza to the Ecuadoren border.

The agreement also calls for two contiguous national parks to be created in the disputed area.

Presidents Alberto Fujimori of Peru and Jamil Mahuad of Ecuador looked on from a dais, sitting on either side of Brazilian President Fernando Henrique Cardoso.

They were accompanied by Presidents Eduardo Frei of Chile, Carlos Menem of Argentina, Hugo Banzer of Bolivia and Andres Pastrana of Colombia. King Juan Carlos and Queen Sofia of Spain also attended, while the United States was represented by U.S. envoy Luigi Einaudi and Thomas "Mack" McLarty, a former aide to U.S. President Bill Clinton.

"It's been a good week for peace accords, with Ireland and Israel and now this," said McLarty. "Hopefully, Kosovo will move forward in the near term."

The treaty also set down the terms of bilateral trade and navigational agreements and created a new bilateral committee to resolve border issues peacefully.

The agreement is expected to pave the way for $3 billion in internationally funded investment in oil, power and other projects in the impoverished region.

Troops were just 40 yards (meters) apart in August, spurring diplomatic efforts to end the dispute which traces its roots back to the 19th century.

The two neighbors fought wars in 1941, 1981 and 1995 over the region.

Tiwintza has special significance for Ecuador, because Ecuadors' troops successfully defended it against repeated assaults by Peruvian troops during the 1995 border war. Twelve Ecuadorian soldiers are believed to be buried there.

The Associated Press and Reuters contributed to this report.