EU foreign ministers have authorised the commencement of talks on an agreement to prepare Bosnia for EU membership.
The decision came on the eve of ceremonies in Washington marking the 10th anniversary of the peace agreement that ended Bosnia's 1992-1995 war.
The EU said negotiations on the "stabilisation and association agreement" would start on Friday in Sarajevo.
"The opening of negotiations marks a historic moment in Bosnia and Herzegovina's development," the ministers said in a statement.
The EU also extended the mandate of its 6,500-strong peacekeeping mission in Bosnia through next year and said force levels should remain "broadly unchanged".
However, an agreement that the EU's police mission will focus on helping the Bosnian force tackle corruption and organised crime will likely see the number of officers cut by about half to around 150.
Bosnia has lagged behind the other former Yugoslav nations in drawing closer to the EU. Slovenia joined the bloc last year; Croatia started formal membership talks last month; Macedonia has concluded a stabilisation and association agreement and Serbia-Montenegro started talks on a similar pre-membership deal this month.
Bosnia's wartime legacy has held the country back, with the EU seeking greater co-operation in the hunt for war crimes suspects and greater unity among the country's Croat, Serb and Muslim communities.
The ministers said they now expected "decisive action" from the Bosnian authorities to bring Bosnian Serb war leaders Radovan Karadzic and Ratko Mladic to the international war crimes tribunal in The Hague.