Melissa Reid and Michaella McCollum, both 20, were stopped with 11kg of cocaine hidden in food packets in their luggage while trying to board a flight to Spain in August.
Reid, from Lenzie, East Dunbartonshire, and McCollum, from Dungannon, Co Tyrone, originally claimed they were forced to carry the drugs by an armed gang which threatened them and their family members.
Their decision means they will not have to stand trial on drug trafficking charges.
Instead, it is likely they will be sentenced to six years and eight months in jail at a hearing which could take place as early as next week.
The two women admitted their guilt at a private hearing in a makeshift courtroom at a men's jail in Lima after arriving there by prison van in handcuffs.
They were heard separately for half an hour each and were asked their names and ages before being given the opportunity to speak.
Their lawyer, Meyer Fishman, declined to comment but a Callao court spokesman in charge of the investigation confirmed the guilty pleas.
"Both women have pleaded guilty to drugs trafficking," said the spokesman.
"It means they automatically benefit from a sixth off the minimum jail sentence of eight years and will be sentenced to six years and eight months in prison.
"Sentencing has not taken place yet and a new hearing where the women will be sentenced has now got to be arranged.
"But it's likely that will take place in around a week's time."
The pair are being held in the notorious Virgen de Fatima prison in the Peruvian capital, Lima.
Reid and McCollum, who had both been working in Ibiza, were facing up to 15 years in prison if they had been found guilty in a trial.
Reid's parents insisted last week that they still believed their daughter had been forced to carry the drugs but that a guilty plea was the best course of action to get her back to the UK.
Both the women, who had been working on the party island this summer, had previously claimed that they had been coerced into carrying the drugs by Colombian drug lords who had kidnapped them at gunpoint and then threatened to hurt their families.
Prosecutors previously confirmed the women could return home to serve their sentences if they pleaded guilty.
Reid was the first to consider changing her plea, maintaining she carried the drugs under duress but that pleading guilty would be the best way to get back to Scotland earlier. She said she could not face being in jail until the age of 35.
McCollum confirmed at the weekend she had also changed her mind about continuing to protest her innocence.
"I understand that the judicial process will be simpler if we both plead guilty," said the 20-year-old.
"We are hoping we will not have to wait too long before we are sentenced and pleading guilty will speed things up."
Peruvian police and prosecutors have said from the start they did not believe the women's stories about being forced to smuggle drugs.
Chief prosecutor Juan Mendoza Abarca claimed their stories were "incredible" and that they had been coached in what to say.
He added: "They staged this whole thing from the beginning because they knew it was possible they would get caught and if they did get caught they had the excuses really well planned.
"It's very obvious they were trained in what to say if they were caught. They were prepared in every sense."
According to Peru's national prisons institute, 90% of the 1,648 foreigners in the country's prisons are either sentenced, or awaiting trial for, drug trafficking.