Kenyan businesses will now have a duty and quota-free access to the European market.
This comes after the Government of Kenya and the European Union signed an Economic Partnership Agreement at State House, Nairobi.
A representative from the European Union said access to markets is the single most important aspect of any investment, and that is what Kenya is getting.
"Kenyan exports will enjoy duty and port-free access to the European market from day one. Kenya, given its economic development status, will only have to open its own market for EU production later and very gradually.
"The EU is Kenya's major export market. Reliability of the business environment and market access is the single most important factor for investment decisions," EU lead negotiator Dora said.
She said the deal will guarantee Kenya access to the European market and will also attract investors.
She added that Kenya is a growing middle-income economy and to develop, it needs quality imported products.
The negotiations on the trade deal began back in 2016.
The EU started talks with the five East African Community (EAC) countries- Rwanda, Burundi, Tanzania and Uganda- but only Kenya ratified the agreement.
EU is Kenya's largest export market accounting for 20 per cent of the country's total exports.