The Mayor of Yarra City Council, Cr Jackie Fristacky, said the council had resolved all outstanding issues with the Collingwood Football Club and was pleased that all parties had reached settlement.
"The park will be retained as a venue to benefit both the sporting community and the people of the City of Yarra," she said.
"We are very pleased with the outcome and believe we have achieved the best result for the community."
As part of the agreement, Yarra City Council will receive $3 million towards the upgrade and maintenance of Victoria Park, which includes $250,000 from the AFL to upgrade the Ryder Stand undercroft.
Collingwood President, Eddie McGuire, said it had always been Collingwood's hope that McHale Stadium at Victoria Park should remain a fixture in the local football landscape.
"We are delighted that the people of Collingwood will receive increased access to this facility and look forward to continuing and increasing our presence in the Collingwood area," he said.
"McHale Stadium at Victoria Park will remain forever in the memories of Collingwood fans. Without it there would not be a Collingwood Football Club."
The CEO of Yarra City Council, Lydia Wilson, said: "Now that we have reached an agreement, Council can move forward in restoring and improving this important and historical facility for the community.
"As soon as the Heritage Victoria registration process is completed, we will be working towards finalising the Victoria Park Masterplan," she said.
The Ryder Stand undercroft will be redeveloped to become a base for the VFL Umpires' operations and the ground will continue to host TAC Cup team training and TAC Cup matches, as well as some AFL Club training and AFL practice matches.
AFL Chief Executive Officer, Andrew Demetriou, said the agreement was a significant step forward for all parties.
"The AFL is delighted that we have been able to play a role in ensuring that Victoria Park will continue to benefit the football industry, while also offering increased access to facilities for the community," Mr Demetriou said.
"The VFL is an important feeder league for our national AFL competition and the provisions of a training and administration base for the VFL umpires will benefit the game at all levels," he said.
