The US and New Zealand will jointly fund a port development in the Cook Islands that's expected to pave the way for deep sea mining.
The $US60 million ($A84 million) project is both a rebuke to China's ambitions in the Polynesian nation and a sign of renewed interest from Washington DC.
The deal was signed on the sidelines of the Pacific Islands Forum in Palau on Tuesday by representatives from the three countries.
US Deputy Secretary of State Christopher Landau - alongside NZ Foreign Minister Winston Peters and Cook Islands Prime Minister Mark Brown - said the port would help realise "the enormous potential" of deep sea mining.
"These are minerals that are very important to economic development around the world," he told journalists.
"We look forward to working with the Cook Islands how they wish to proceed with the development of this resource and we look forward to partnering with them with responsible and effective development."
Deep sea mining, which is yet to be commercialised anywhere in the world, involves the extraction of avocado-like nodules from the sea bed.
Mr Brown gave one to leaders when he hosted the PIF summit in 2023.
The practice is deeply controversial and faces pushback from ecologists and conservation-minded governments in the region, who describe it as unproven.
The Cook Islands, under re-elected leader Mark Brown, has been an enthusiastic proponent of the potential industry, which remains in an explorative phase.
The $US60 million commitment will see the Penrhyn port, a former military site and the Cook Islands' northernmost port, upgraded, also providing improved transport links
Mr Brown said the project would build economic diversification and resilience.
Mr Peters, who has championed US investment in the region, said it was a red-letter day for his "quiet diplomacy".
"It's a big, big, day for the region," he said.
The 81-year-old foreign minister, who has close ties to the Trump administration, has previously criticised the US for its inconsistent diplomacy in the Pacific.
The announcement also appears to draw a line under long-running tensions between Rarotonga and Wellington.
The Cook Islands governs in free association with New Zealand, meaning its citizens get Kiwi passports and come under New Zealand's defence arrangements.
However, New Zealand cut aid to the country last year following Mr Brown's decision to sign a strategic partnership with China, which he insisted was for economic reasons rather than security.
Mr Peters said the hatchet had been buried.
"The relationship between these cousins is back to its best footing ever," he said.
"This is a realm country and we've spent time reminding the Chinese of our special relationship that's got a capital S."
He also dismissed those who questioned the appropriateness of deep sea mining.
"It's over to the Cook Islands people when you talk about that resource," he said.
"We can't sit back in New Zealand and say you can or your can't if it means their future wealth and their future wellbeing."
