The agreement says the new Muslim-administered region will replace an existing autonomous territory consisting of five of the country's poorest and most violent provinces.
That territory was created by a 1996 peace agreement with the Moro National Liberation Front, but was considered a failure because it did not end the conflict, the rebels did not disarm and it did not improve the lives of Muslims. Corruption, political violence and crimes such as kidnappings and extortion persisted, and the current Moro group continued to fight for self-rule.
Another preliminary accord in 2008 was struck down as unconstitutional because the Supreme Court ruled it would create a separate state.
Western governments have long worried over the presence of small numbers of al-Qaida-linked militants from the Middle East and Southeast Asia seeking combat training and collaboration with the Filipino insurgents.
One of those extremist groups, the Abu Sayyaf, is not part of any negotiations, but the hope is that the peace agreement will isolate its militants and deny them sanctuary and logistical support they had previously received from rebel commanders.
One of those hardline commanders, Ameril Umbra Kato, broke off from the main Moro insurgents last year. Kato's forces attacked the army in August, prompting an offensive that killed more than 50 fighters in the 200-strong rebel faction.
Abu Misri Mammah, a spokesman for Kato's forces, said Sunday that his group does not recognize the peace accord.
"That's a surrender," he said. "We won't waver from our armed struggle and continue to aspire for a separate Muslim homeland that won't be a creation of politicians."
Michael Mastura, a member of the rebel negotiating team, said guerrilla leaders have to forge a strong peace deal that can withstand any opposition from hardliners.
"It is easy, just gather a few men and disturb, because there are many firearms around. But that's not the mainstream line," Mastura said in an interview. "That is why we have to show that this is the way rather than their way."
Iqbal has said his group will not lay down its weapons until a final peace accord is concluded. He said the insurgents could form a political party and run in democratic elections to get a chance at leading the autonomous region.
Associated Press writer Oliver Teves contributed to this report.
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