The controversial right-wing Israeli politician Avigdor Lieberman has agreed to bring his Yisrael Beitenu party into the country's governing coalition.
The deal, which shores up Prime Minister Benjamin Netanyahu's one-seat majority in parliament, will see Mr Lieberman appointed defence minister.
Mr Lieberman pledged his commitment to "responsible, reasonable policy".
The deal led Moshe Yaalon, a member of Mr Netanyahu's Likud party, to quit as defence minister in protest on Friday.
The former general warned that Israel was being taken over by "dangerous and extreme elements".
Mr Lieberman, who has twice served as foreign minister, has a reputation for inflammatory comments and takes a hawkish stance towards the Palestinians.
Analysis - Kevin Connolly, BBC News, Jerusalem
Avigdor Lieberman is a colourful addition to Israel's ruling coalition.
A Russian-speaking immigrant from the former Soviet Union, he is routinely described in newspaper profiles as a former nightclub bouncer in reference to a brief chapter in his early life.
Mr Lieberman served as foreign minister in the past, where he was generally perceived to cut a sometimes undiplomatic figure. At the defence ministry he will be in charge of the Israel Defense Forces (IDF), one of the most revered institutions in Israeli society. Benjamin Netanyahu has emphasised, though, that he will continue to take the lead in matters of national security.
The recruitment of Mr Lieberman and his Yisrael Beitenu party cannot be seen straightforwardly as a sign of a government drifting to the right.
Mr Netanyahu has been desperate to find a way to enlarge his coalition, which previously had a majority of a single vote, and he considered cutting a deal with the left-wing opposition before finally turning to Mr Lieberman.
Since winning a fourth term in office last year, Mr Netanyahu has said he would explore bringing a sixth party into his coalition to widen its majority in parliament.
Wednesday's deal will give the prime minister control of 66 of the 120 seats in the Knesset. He previously had 61, which made it difficult to pass legislation.
Before agreeing to bring in Yisrael Beitenu, Mr Netanyahu had engaged in negotiations with the centre-left Zionist Union, amid international pressure to resume peace talks with the Palestinians.
France recently announced it would host an international conference on 3 June to try to revive the peace process, which collapsed amid acrimony in 2014.
"I am committed to promoting the peace process. I am committed to make every effort to reach an agreement," Mr Netanyahu said after signing the coalition deal with Mr Lieberman in Jerusalem.
"I intend to seize those opportunities. A broader government, a more stable government will make it easier to do so," he added.
Mr Lieberman, who lives in a Jewish settlement in the occupied West Bank, has repeatedly voiced scepticism about pursuing peace with the Palestinians.
At one point he suggested toppling the Palestinian Authority. A few weeks ago he threatened to kill a Hamas leader if the militant Islamist movement did not return the bodies of Israeli soldiers killed in the 2014 war in the Gaza Strip.
But on Wednesday he stated: "My commitment first of all is to responsible, reasonable policy."
"All of us have commitments to peace, to the final status agreement, to understanding between us and our neighbours."
The chief Palestinian negotiator, Saeb Erekat, warned that Mr Lieberman's appointment as defence minister would "result in apartheid, racism and religious and political extremism".
In a separate development on Wednesday, an Israeli human rights group said it would stop filing complaints against alleged abuses by Israeli soldiers.
B'Tselem said that after 25 years of going through the military's legal channels it had concluded the process was what it called a "whitewash mechanism".
The military said B'Tselem's view was biased and failed to reflect reality.
Correction 27 May 2016: The number of seats held by the coalition has been changed to 66, rather than 67 as stated in an earlier version.