In a joint statement, the parties said that the five-day strike ended with agreements on all core issues.
The agreement followed marathonic negotiations and several Labor Court extensions.
"The agreement reached (today) reflects the necessary balance between the need to improve workers' rights and the government's responsibility to protect and stabilize Israel's economy," the statement said.
The deal includes a wage increase, better retirement and social rights conditions and several subsidies, which the Treasury agreed to put into effect immediately.
The agreement also includes better enforcement of labor laws, an excellence grant, the transition of some temporary government employees to permanent status, and better protection for contractors' workers.
Omri Efraim and Ran Rimon contributed to this report