UK signed a deal transferring sovereignty of the Chagos Islands to Mauritius, including the key Diego Garcia military base.
Diego Garcia military base plays a central role in UK-US defence operations in the Indian Ocean.
The base will now be leased from Mauritius under a new 99-year lease.
The UK will pay Mauritius an average of £101 million ($129m) per year.
One of the last remnants of the British Empire, the Chagos Islands have been under British control since 1814.
Britain detached the Chagos Islands from Mauritius in 1965—three years before Mauritius gained independence—and formed the British Indian Ocean Territory.
In a non-binding 2019 opinion, the International Court of Justice ruled that the U.K. had unlawfully carved up Mauritius.