A delegation was sent to the remote Wa region in Shan state, which borders China, said the Kyemon Daily newspaper.
The military and the United Wa State Army (UWSA) agreed to hold regular meetings and withdraw to positions they occupied before a recent stand-off.
The move came as part of a government effort to reach agreements with all the country's ethnic groups.
For decades, Burma, also known as Myanmar, has faced rebellions from several minority groups, seeking autonomy.
The UWSA is believed to be the largest, with a fighting force numbering as many as 30,000.
It reached an agreement once before with the former military regime in 1989, but recently tensions flared after the Burmese military surrounded Wa territory.
The UWSA is said to be equipped with state-of-the-art weaponry. China reportedly supplied combat helicopters to the group, a report by UK-based intelligence monitor Jane's Information Group said last May.
The Wa region was singled out by the international community for its involvement in huge drug problems in the region.
Under intense international pressure, especially from China, the UWSA banned opium cultivation in 2005.
Burma is the second largest opium grower in the world after Afghanistan, according to UN reports. Almost all of the opium it produces is grown in Shan and Kachin states.
President Thein Sein's government has embarked on a series of reforms to find a solution to the problem,
Ceasefires and political opening up mean international organisations such as the UN will have better access to areas that were previously considered no-go areas.
Burma signed ceasefire agreements with the Karen and Kachin rebel groups earlier this year.

It has also doubled the prison term for offenders to 20 years.
Activists hope the law will encourage more slaves to take legal action to secure their freedom and will encourage the courts to punish slave owners.
Mauritania abolished slavery in 1981, but activists say it is still widely practised and many in the West African country inherit their slave status.
According to the AFP news agency, the new law, passed on Wednesday, also criminalises "10 other forms of slavery", including forced marriage and handing a woman over to another man without her consent after the death of her husband.
Boubacar Ould Massoud, chairman of campaign group SOS Slavery, told the BBC it also provides for legal help for victims and enables them to seek compensation.
He said it was laughable to think that slavery did not exist in Mauritania.
"Often judges sympathise more with the slave owners than with the slaves. Slavery cases taken to court have up until now referred to the slaves as 'non-paid workers' or 'exploited and underage workers,'" he told BBC Afrique.
Anti-slavery activists in Mauritania also say they have faced harassment from the authorities.
AFP reports that three anti-slavery activists will be judged on appeal on 20 August in the central town of Aleg.
They include two members of the Initiative for the Resurgence of the Abolitionist Movement in Mauritania, a well-known non-governmental organisation.
They had been sentenced to two years in prison for "membership of an unrecognised organisation", the agency reports.
According to a 2014 survey by anti-slavery campaign group Walk Free, Mauritania has the highest number of slaves as a proportion of the population, at 4%.
Burma's government and rebels from the ethnic Wa guerrilla group have reached a peace deal, state media has reported.
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Campaigners have welcomed Mauritania's new anti-slavery law which makes the offence a "crime against humanity".