Kiir signed the agreement in Juba, South Sudan's capital, in a ceremony witnessed by regional leaders. Kiir said he was signing the document despite having serious reservations. He signed the same agreement endorsed by rebel leader Riek Machar, said Kiir's spokesman Ateny Wek Ateny.
Machar, the former deputy president, signed the agreement last week in Ethiopia but Kiir refused, saying he needed more time, drawing condemnation from diplomats who want a quick agreement to end the violence in the world's newest country.
Kiir was under intense pressure to sign the compromise accord mediated by a group of neighboring countries, with the U.S. threatening new U.N. sanctions if he failed to do so.
The fate of the U.N. Security Council draft resolution that also threatens an arms embargo was not clear. The council has not yet discussed the issue since Kiir's signing.
Signing the agreement Wednesday, Kiir said he felt the peace deal had been imposed on him and said it is flawed. Kiir said some aspects of the deal "are not in the interest of just and lasting peace. ... We had only one of the two options, the option of an imposed peace or the option of a continued war ... We are here talking about peace."
He accused rebels of attacking positions held by government troops in two areas in the volatile state of Unity on Wednesday.
The agreement binds Kiir into a power-sharing arrangement with Machar, a political rival whose dismissal in July 2013 sparked a political crisis that later boiled over into a violent rebellion. The fighting has often been along ethnic lines, pitting Kiir's ethnic Dinka people against Machar's Nuer.
The accord calls for the establishment of a coalition government within 90 days. Previous cease-fires have been quickly broken, however, with both sides accusing the other for truce violations. It also calls for a demilitarized Juba, one of the key sticking points for Kiir's side during negotiations, and also delays national elections until 2018 at the earliest.
The U.S. and its partners welcomed the signing and said in a statement Wednesday that that there would be consequences for those who return to arms, urging an immediate and permanent ceasefire by warring factions.
"President Kiir made the right decision to sign the peace agreement today, but we should be just as clear that the United States and the international community does not recognize any reservations or addendums to that document," said White House spokesman Josh Earnest in Washington.
He added that both sides should abide by the agreement as written and should "work toward ending the conflict and rebuilding the country."
Thousands of South Sudanese have been killed in the fighting and more than 1.6 million people have been displaced. Atrocities have occurred in which young girls have been raped and burned alive, according to the U.N.
Ugandan President Yoweri Museveni was in Juba to witness the signing and welcomed the agreement.
"You are fighting for the sovereignty of the people of South Sudan to make their own decisions," said Museveni. "That cannot be realized in war. When you have war it is not the people who make decisions. It is the gunmen who make decisions and these are not necessarily mandated by the people. Therefore you need to get out of this trap, remove the guns and give back power to the people so that the people can vote for what they like."
Emma Vickers, South Sudan campaigner for the watchdog group Global Witness, urged vigilance to uphold the agreement: "Unless its international guarantors keep up the pressure on the South Sudanese leadership in the months and years after it is signed, the necessary reforms may never materialize, and the country risks sliding back into a new cycle of corruption and violence."