The two countries have been in a security alliance since the 1950-53 Korean war, which ended with an armistice rather than a peace treaty -- with more than 28,000 US troops stationed in the South to guard against threats from Pyongyang.
The negotiations ended with South Korea's foreign ministry saying Seoul will pay about 1.04 trillion won (USD 924 million) in 2019, 8.2 per cent more than what it offered under a previous five-year pact which expired at the end of last year.
The ministry said although the US had demanded a "huge increase" in payment, they were able to reach an agreement that reflects "the security situation of the Korean peninsula".
"The two countries reaffirmed... the importance of a strong South Korea-US alliance and the need for a stable stationing of the US troops," it said in a statement issued after a signing ceremony.
The row had raised concern that Trump may use it as an excuse for US withdrawal. The US president and North Korean leader Kim Jong Un are expected to discuss an official declaration to end the decades-old war -- a prelude to a peace treaty -- at their second summit in Hanoi later this month.
But Trump told US broadcaster CBS last week that he had "no plans" to remove US troops from South Korea as part of a deal at the upcoming summit, although he admitted "maybe someday" he would withdraw them, adding: "It's very expensive to keep troops there."
Since the deal is only valid for one year, the two sides may soon have to return to the negotiating table.
Seoul contributed around 960 billion won last year -- more than 40 per cent of the total bill -- financing the construction of American military facilities and paying South Korean civilians working on US bases.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)