The bitter dispute has plagued the Minns government for more than eight months as paramedics pointed to higher salaries offered to their colleagues in the ACT, Queensland and Victoria.
Following a series of late-night talks, the government and Health Services Union announced on Wednesday they had struck a deal for an average pay rise of 25 per cent over four years.
NSW paramedics wanted to bring their pay up to the level of interstate colleagues. (Bianca De Marchi/AAP PHOTOS)
Increases will range from 11 to 29 per cent, depending on paramedics' level of experience.
The rises will include a boost to the base salary for year-six paramedics from $79,737 to $88,082 from the start of next year, an up-front increase of more than 10 per cent.
The agreement will cost around $500 million, part of which is to be funded through savings from within the health portfolio, the government said.
HSU NSW secretary Gerard Hayes said paramedics had fought for proper professional recognition and "salary justice".
"Our paramedics are highly skilled professionals who exercise fine clinical judgement under incredible stress," he said.
"Their work saves lives. Finally they will be paid for it."
NSW Health Services Union Secretary Gerard Hayes says paramedics had fought for salary justice. (Dan Himbrechts/AAP PHOTOS)
The deal needs to be confirmed by the Industrial Relations Commission, where the parties entered mediation on Monday.
Both sides wanted to avoid a catastrophic breakdown in services after thousands of union members vowed to allow their paramedic registrations to lapse from January 1 next year.
Health Minister Ryan Park previously warned such action could cripple triple-zero services during new year celebrations, putting pressure on the government to reach a speedy deal.
Earlier in discussions the union rejected an offer that the government said would have lifted salaries by an average of 19 per cent over four years.
But the complex offer did not match base pay for Queensland paramedics and would leave NSW workers short-changed, the HSU said.