Bolivia and the United States restored full diplomatic ties Monday for the first time since 2008.
Three years ago the Andean nation's government expelled the U.S. ambassador and the Drug Enforcement Administration (DEA). The U.S. expelled the Bolivian ambassador in return.
Bolivian President Evo Morales, a coca farmer, accused the Americans of inciting his political enemies. He has been critical of America's Latin American policies.
The new diplomatic agreement includes the two nations cooperating in the war on drugs, but did not address the issue of American DEA agents returning to Bolivia. There was no specific date for the ambassadors to return to their respective diplomatic posts.
Bolivia is the world's third largest cocaine producer behind only Peru and Colombia.
Morales is a close ally of Venezuelan President Hugo Chavez.
Some information for this report was provided by AP and Reuters.