The two nations will cooperate on promoting democracy and easing ethnic and religious conflict in the autocratic South East Asian country, amid human rights concerns.
US President Barack Obama announced on Wednesday his intention to lift economic sanctions on Myanmar in a meeting with the country's State Counsellor Aung San Suu Kyi at the Oval Office.
The economic restrictions were put in place due to ongoing human rights violations by the country's ruling military junta, which has been in power for 49 years.
Lifting sanctions "is the right thing to do in order to ensure that the people of Burma [Myanmar] see the rewards from a new way of doing business, and a new government," Obama said.
After the meeting with Suu Kyi, he told reporters that the changes would come into effect "soon."
"[The] United States intends to sign a loan guarantee with five local microfinance institutions to support over $10 million in loans to small businesses in Myanmar, which will increase access to food and support employment opportunities for communities in Myanmar," the White House said.
The two countries will also cooperate in several areas to promote democracy and ease ethnic and religious conflicts in the country.
We look forward to better, closer relations Daw Aung San Suu Kyi of Burma visiting the White House: https://t.co/maLP0kYREE— White House Archived (@ObamaWhiteHouse) September 14, 2016
Suu Kyi's visit was her first to Washington since she secured a sweeping victory against military rulers in last year's elections.
Despite that victory, Suu Kyi is still barred from holding the office of president under the country's military-drafted constitution because her sons are not citizens of Myanmar.
Instead, she serves as the country's de facto leader by holding the positions of foreign minister and state counselor.
The political relationship between the US and Myanmar worsened after the 1988 military coup in the country and violent suppression of pro-democracy demonstrations. A crackdown on peaceful protestors in September 2007 further strained the relationship.
However, Myanmar began a series of political, economic and administrative reforms in 2011 that saw Washington ease some sanctions in return.
The thaw in relations comes at a time when Washington is seeking regional dominance over the South China Sea in opposition to China.
The US has made a series of agreements with states in the region — including Vietnam and Indonesia — that are seeking international support against China.
China claims most of the South China Sea, through which $5 trillion in ship-borne trade passes every year and is thought to potentially be a rich source of energy. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims.