BRUSSELS—Leaders of Serbia and Kosovo reached a preliminary accord aimed at transforming relations between the estranged Balkan neighbors—a potentially major step toward healing ethnic animosities and boosting economic growth in one of Europe's least-developed regions.

After months of talks brokered by the European Union, Serbia tentatively agreed Friday not to obstruct Kosovo's efforts to integrate more closely with the rest of Europe, in exchange for pledges of significant autonomy for Serb communities in Kosovo, where the majority of citizens are Muslim ethnic Albanians.

Kosovo, a former province of Serbia, effectively separated from the country in 1999 after U.S. and North Atlantic Treaty Organization forces waged a bombing campaign against Serbia to halt interethnic conflict there. Kosovo formally declared independence in 2008.

"What we are seeing is a step away from the past and, for both of them, a step closer to Europe," said Catherine Ashton, the EU's top diplomat, who personally oversaw the negotiations.

The provisional 15-point deal was initialed by Serbian Prime Minister Ivica Dacic and Kosovo Premier Hashim Thaci. It now must be ratified by the two countries' governments and could face significant opposition from Serbs in north Kosovo, who reject the authority of the Kosovo state.