The 10-year deal, which will see the Aotearoa contribute $NZ38.5 million to USP's core funding for the first five years, was announced by Deputy Prime Minister Carmel Sepuloni in Suva on Wednesday.
The partnership is expected to support USP's long-term planning and stability as it tries to bounce back from a challenging period after the former Fijian administration cut off its financial contribution to the university.
"USP has been and continues to be a bedrock for regionalism and an institution that needs to be strengthened for its long-term sustainability," USP's Vice Chancellor and President Pal Ahluwalia said.
"This partnership secures our ambitions and allows us to focus on the long-term economic, social and cultural development of USP's member countries and to address their specific national needs," Ahluwalia said.
USP is jointly owned by the governments of 12 Pacific island nations. New Zealand, along with Australia, has been part of the university since its inception in 1968.
Sepuloni said the deal reaffirmed NZ's commitment to the USP and the important role it plays to the region.
"This partnership will support an enduring and thriving University. It's a partnership that is grounded in the value of Pacific regionalism, informed by Pacific knowledge and cultures, and led by Pacific people."
Sepuloni said it also provided Aotearoa New Zealand with the opportunity to support the university's strategic direction, as well as to deliver against shared priorities.
"It also supports Pacific action on the region's 2050 Strategy for the Blue Pacific Continent, and work towards countries' Sustainable Development Goals (SDGs).
She said New Zealand is committed to upholding regional security and stability in the Pacific "to maintain and build on the institutions that have long maintained peace and security within our region."
"Empowering Pacific-led development strengthens the autonomy, long-term resilience, and prosperity of the region," Sepuloni said.