After weeks of negotiations, Greece's euro partners and the International Monetary Fund (IMF) agreed to release the payments and introduce measures designed to reduce the country's massive debts to a more manageable level within a decade.
These include reducing the interest rates Greece has to pay on the loans and a bond buyback programme.
Greek Prime Minister Antonis Samaras hailed the agreement as a victory that heralds "a new day for all Greeks", but market reaction was more cautious.
For three years, Greece has been struggling to convince markets as well as its creditors that it can get a grip on its public finances, which spiralled out of control.
The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25%.
The troika of the European Central Bank, IMF and the European Commission has twice agreed to bail out Greece.
In return, Greece has had to impose several rounds of austerity measures and submit its economy to scrutiny.
Without the bailout money, the country would be staring bankruptcy in the face together with a possible exit from the 17-country eurozone, with potentially chaotic repercussions for the world economy.
Greek Finance Minister Yannis Stournaras said the deal was "very important for it keeps Greece in the euro, offers it a significant opportunity to exit the vicious cycle of recession and over-indebtedness, and contributes to its debt reduction".
However, opposition leader Alexis Tsipras, whose Radical Left Coalition wants Greece to scrap its bailout commitments, accused the conservative-led governing coalition of failing to defend the country's interests.
The meeting in Brussels was the third time in the last two weeks that eurozone finance ministers had tried to hammer out a deal.
The main aim of the bailout programme is to right Greece's economy and get it to a point where it can independently raise money on the debt markets once the bailout loans start to run out at the end of 2014.
The deal still requires the authorisation of a number of parliaments in Europe, including in Germany, where patience with repeated Greek rescues has been running low.
However, Rainer Bruederle, the caucus leader of the Free Democrats, Germany's junior coalition partner, said he expects broad approval tomorrow.
He said: "Conditions have been put together which maintain a tough mechanism toward Greece, but still save us from a collapse of the Greek economy possibly having consequences that could pull down the whole of Europe."
Greek newspapers were divided on whether the agreement would give the country breathing space to right its economy, or keep it trapped in years of recession and austerity.
Ta Nea argued in an editorial that the deal affords Greece "a last chance" to escape the crisis.
But the left-wing Efimerida ton Syntakton argued the agreement "condemns Greek society to a slow death".