The German-Turkish University is to accept about 5,000 students for courses in German, English and Turkish on the social sciences, engineering, jurisprudence and the natural sciences. Graduates will hold degrees recognised in both Germany and Turkey.
German Foreign Minister Frank-Walter Steinmeier, his Turkish counterpart Alib Babacan and German Education Minister Annette Schavan signed the accord in Berlin. Steinmeier described the planned university as "a further symbol of the close political and social ties between our two countries."
Babacan said the project would "advance the good relations between Germany and Turkey" and called for support from the business community and civil society for the university.
The institution is the centrepiece of the Ernst Reuter Initiative launched in September 2006 by Steinmeier and his Turkish counterpart at the time, Abdullah Gül, during violent international protests over caricatures of the Prophet Mohammed printed in European newspapers. Reuter was a leading Social Democrat who sought refuge from the Nazis in Turkey during World War II. In 1947 he was elected mayor of Berlin.
Some 2.5 million people of Turkish origin live in Germany - the largest immigrant group in the country. Most are descendants of "guest workers" invited to Germany in the 1960s.