The European Commission has announced that Romania and Bulgaria will be admitted to the EU in January 2007, but under strict conditions.
Commission President Jose Manuel Barroso said both countries had made enough progress to join the union.
But they will be checked for progress in curbing organised crime and corruption, and ensuring food safety and the proper use of EU funds.
Bulgaria's PM said the move was the fall of the Berlin Wall for his nation.
Romanian Prime Minister Calin Tariceanu said his people should be proud of themselves, but should not make the mistake of thinking that accession would mean all the country's problems would be solved.
The conditions are tougher than those imposed on previous new members, observers say.
The BBC's Oana Lungescu in Strasbourg says they are intended both as a reassurance for EU citizens, only half of whom support further enlargement, and as a warning to Turkey and the Balkan nations still lobbying for EU membership.
The commission's report confirms that after seven years of talks, Bulgaria and Romania are able to take on the rights and obligations of EU membership.
Reading the report, Mr Barroso said the two nations' entry would be a "historic achievement".
"Bulgaria and Romania have carried out an extraordinary reform process and they have gone through a remarkable transformation," he said.
The two countries missed out on the EU's big eastward expansion in 2004.
Correspondents say they will be delighted that they can get in on schedule before Mr Barroso puts a block on further expansion.
JOINED IN 2004
"This is the genuine and final fall of the Berlin Wall for Bulgaria," said Bulgarian Prime Minister Sergei Stanishev.
But the commission president said there were a number of areas where further progress was needed in the months leading to accession and beyond.
Unless Bulgaria cracks down on organised crime, legal decisions taken by its courts could be disregarded in the rest of Europe.
Both countries will have to report every six months on progress in fighting corruption.
By March, they also need to set up agencies to handle millions of euros worth of EU farm aid, or risk losing a quarter of the cash.
Both will face food export bans due to outbreaks of animal diseases like swine fever, while Bulgarian planes could be banned from flying into EU airspace until the country improves its air safety standards.
There could also be restrictions on migration to other EU countries for up to three years.
An EU official said the commission did not want to punish Bulgaria and Romania, but to make them work harder to carry out reforms.
Mr Barroso said on Monday the EU could not go on with further expansion until it decided what to do about its stalled constitution.
The rules of the European club can currently cope to 27 members at most, though experts say they could be tinkered with to squeeze Croatia in before a major treaty change.
"It would be unwise to bring in other member states apart from Romania and Bulgaria," he said on Monday.
"There are some limits to our absorption capacity."