It is the first major foreign investment in Iran since international nuclear sanctions were lifted.
French oil ministry officials have confirmed the deal to develop the South Pars gas field, with French company Total getting a 50.1 per cent stake.
China's CNPC would hold a 30 per cent stake, while 19.9 per cent would go to Iran's Petropars.
Total had planned to sign the contract months ago but delayed the move to see if new United States president Donald Trump would renew sanctions on Iran, lifted last year.
Iranian oil minister Bijan Namdar Zangeneh says the deal shows Iran is open for business.
"With the signing of the contract, many of the doubts that foreign companies have faced will be resolved for investment and work in Iran, and this will be the starting point for those who want to invest in Iran."
Total chief executive Patrick Poyanne says Total is happy to be first at returning to Iran.
"We are the first international company to come back to Iran, and it's a great source of pleasure and pride to continue the story and to have the opportunity to sign the South Pars 11 contract, the first contract which will be signed under the new Iranian petroleum-contract IPC framework."
Total had been one of the biggest investors in the country before international sanctions were imposed in 2006 amid suspicions Iran was trying to develop nuclear weapons.
A business correspondent for the BBC's Persian Service, Amir Paivar, says the deal may open doors for other companies to follow.
"It is very significant for Iran, to start with. It will increase Iran's gas production by roughly equal to 400,000 barrels of oil. Apart from that, I think it's about the symbolism of the deal after sanctions are lifted. A lot of European, Western, companies were sceptical about whether they should go back to Iran or not. Now, they're getting a signal that France's biggest oil company is going back to Iran, and it is starting, probably, to pave the way for the others."
Iran reached a deal with the United States and other major nations in 2015 to restrict its nuclear program in exchange for international economic sanctions being lifted.
But President Trump has criticised the deal done by predecessor Barack Obama, calling it the worst deal ever negotiated.
In April, he ordered a review, but that could take months.
The latest development comes as thousands of people attended a weekend event in Paris condemning Iran for allegedly interfering in the Middle East.
Former speaker of the US House of Representatives Newt Gingrich was among those present.
"I think, first, being honest about what it is: it's the largest supporter of state terrorism in the world. And all of the European countries ought to recognise that, and they should recognise, as President Trump does, that the agreement that was reached under Obama is crazy. I mean, this is not a dictatorship that you can appease."
Others attending the event included former New York mayor Rudolph Giuliani and former US ambassador to the United Nations John Bolton.
