Five ministerial jobs will go to the Maoists in a landmark agreement that is the latest step in a peace process to end a decade of bloody civil war.
Baburam Bhattarai, the Maoist's second-in-command, said: "This is a major achievement for our party, which we reached because of the 10-year-long people's war."
The accord on sharing ministerial posts ends several months of wrangling between the seven main parties and the Maoists.
"This is our first step in achieving the goal of establishing a new Nepal," Bhattarai said.
The rebels have won the ministries for information, local development, planning and works, forestry, and women and children.
They ended their armed campaign under a peace deal signed last year, but the process has been shaken by allegations against the Maoists of kidnappings, beatings and extortion.
Girija Prasad Koirala, the leader of the Nepali Congress party, retains his position as prime minister, officials said.
Koirala's party will also hold the key defence, home and finance ministries, while the Communist Party of Nepal (Unified Marxist Leninist) - Nepal's second largest party - will hold the foreign ministry.
The cabinet will be formally approved by Nepal's recently overhauled parliament - which also now includes Maoist members - on Saturday, said Ram Chandra Poudel, a senior Congress party official.
Under the next step laid out in the peace plan, Nepal is due to hold elections for a constituent assembly in June.
This assembly will rewrite the country's constitution and decide on the fate of King Gyanendra - and whether or not the impoverished country should keep its 238-year-old monarchy.
King Gyanendra, seen by some supporters as a Hindu deity, was forced to end direct rule last year after months of mass protests organised by an alliance of the political parties and the Maoists.