Neither side provided many specifics but said the only words players and fans wanted to hear.
"We want to play basketball," Commissioner David Stern said.
After a secret meeting earlier this week, the sides met for more than 15 hours Friday, working to try to save the season. This handshake deal, however, still must be ratified by both owners and players.
Stern said it was "subject to a variety of approvals and very complex machinations, but we're optimistic that will all come to pass and that the NBA season will begin Dec. 25."
Barring a change in scheduling, the 2011-12 season will open with the Boston Celtics at New York Knicks, followed by Miami at Dallas in an NBA finals rematch before MVP Derrick Rose and Chicago close the tripleheader against Kobe Bryant and the Lakers.
The league plans a 66-game season and aims to open training camps Dec. 9. Stern has said it would take about 30 days from an agreement to playing the first game.
"All I feel right now is `finally,"' Dwyane Wade told The Associated Press.
Just 12 days after talks broke down and Stern declared the NBA could be headed to a "nuclear winter," he sat next to union executive director Billy Hunter to announce the deal.
"We thought it was in both of our interest to try to reach a resolution and save the game and to be able to provide the mind of superb entertainment the NBA historically has provided," Hunter said.
A majority on each side is needed to approve the agreement. The NBA needs votes from 15 of 29 owners. (The league owns the New Orleans Hornets.) Stern said the labor committee plans to discuss the agreement later Saturday and expects them to endorse it and recommend to the full board.
The union needs a simple majority of its 430-plus members. That process is a bit more complicated after the players dissolved the union Nov. 14. Now, they must drop their antitrust lawsuit in Minnesota and reform the union before voting on the deal.
Because the union disbanded, a new collective bargaining agreement can only be completed once the union has reformed. Drug testing and other issues still must be negotiated between the league and the players.
"We're very pleased we've come this far," Stern said. "There's still a lot of work to be done."
The settlement first was reported by CBSSports.com.
Participating in the talks for the league were Stern, deputy commissioner Adam Silver, Spurs owner Peter Holt, the chairman of the labor relations committee, and attorneys Rick Buchanan and Dan Rube. The players were represented by executive director Billy Hunter, president Derek Fisher, vice president Maurice Evans, attorney Ron Klempner and economist Kevin Murphy.
Owners locked out the players July 1 and the sides spent most of the summer and fall battling over the division of revenues and other changes owners wanted in a new collective bargaining agreement. They said they lost hundreds of millions of dollars in each year of the former deal, ratified in 2005, and they wanted a system where the big-market teams wouldn't have the ability to outspend their smaller counterparts.
Players fought against those changes, not wanting to see any teams taken out of the market when they became free agents.
"This was not an easy agreement for anyone. The owners came in having suffered substantial losses and feeling the system wasn't working fairly across all teams," Silver said. "I certainly know the players had strong views about expectations in terms of what they should be getting from the system. It required a lot of compromise from both parties' part, and I think that's what we saw today."
But it was never easy. The day required multiple calls with the owners' labor relations committee, all the while knowing another breakdown in talks would mean not only the loss of the Christmas schedule but also throw the entire season in jeopardy.
"We resolved, despite some even bumps this evening, that the greater good required us to knock ourselves out and come to this tentative understanding," Stern said.
He denied the litigation was a factor in accelerating a deal, but things happened relatively quickly after the players filed a suit that could have won them some $6 billion in damages if the court ruled the lockout was illegal.
"For us the litigation is something that just has to be dealt with," Stern said. "It was not the reason for the settlement. The reason for the settlement was we've got fans, we've got players who would like to play and we've got others who are dependent on us. And it's always been our goal to reach a deal that was fair to both sides and get us playing as soon as possible, but that took a little time.
And led to the second shortened season in NBA history, joining the 1998-99 lockout that reduced the schedule to 50 games. This time the league will miss 16 games off the normal schedule.