Since the PKK launched its insurgency in 1984 - originally with the aim of creating an independent Kurdish state - the conflict has killed more than 40,000 people, exerted a huge economic burden and fuelled social tensions.
The PKK's decision could boost NATO member Turkey's political and economic stability and encourage moves to ease tensions in neighbouring Iraq and also in Syria, where Kurdish forces are allied with US forces.
While Ankara welcomed the decision to dissolve, it does not guarantee peace.
Rather it paves the way for agreeing to a tricky legal framework for securely disarming the PKK, which is designated a terrorist group by Turkey and its Western allies.
"The PKK 12th Congress decided to dissolve the PKK's organisational structure... and end the armed struggle," Firat news agency reported it as saying on Monday in the closing declaration of a congress held last week in northern Iraq, where the group is based.
A PKK official separately confirmed the decision and said all military operations would cease immediately, adding weapon handovers were contingent on Ankara's response and approach to Kurdish rights, and the fate of PKK fighters and leaders.
Kurds make up 20 per cent of Turkey's 86 million population.
The PKK held the congress in response to a February call to disband from its jailed leader Abdullah Ocalan, who has been imprisoned on an island south of Istanbul since 1999.
It said on Monday that he would manage the process.
However, it was not clear whether Ankara agreed to Ocalan's continued role, which polls suggest could be unpopular among Turks.
It was also unclear how the process would affect the Kurdish YPG militia in Syria.
YPG leads a US-allied force against Islamic State there and is regarded by Turkey as a PKK affiliate.
YPG has previously said Ocalan's call did not apply to it, contradicting Ankara's view.
It did not immediately comment on the PKK's announcement.
The disbanding will give President Recep Tayyip Erdogan a chance to boost development in Turkey's mainly Kurdish southeast, where the insurgency has impaired the regional economy for decades.
Turkey would take necessary measures to ensure smooth progress towards a "terror-free" country after the PKK decision, said the presidency's communications director, Fahrettin Altun.
In its statement, the PKK said it "has completed its historic mission", which over the years shifted to seeking greater Kurdish rights and limited autonomy in southeast Turkey, rather than an independent state.
"The PKK struggle has broken the policy of denial and annihilation of our people and brought the Kurdish issue to a point of solving it through democratic politics," it said on the Firat website.
The PKK decision comes amid tumult in Turkish politics: Istanbul's opposition mayor Ekrem Imamoglu, Erdogan's main challenger, was jailed in March pending corruption charges in a move that sparked the country's largest protests in a decade.
There have been intermittent peace efforts over the years, most notably a ceasefire between 2013 and 2015 that ultimately collapsed.
Ending the insurgency would remove a constant flashpoint in Kurdish-run, oil-rich northern Iraq, while facilitating efforts by Syria's new administration to assert greater sway over areas in northern Syria controlled by Kurdish forces.
Ocalan's call was prompted by a surprise proposal in October by Devlet Bahceli, Erdogan's ultra-nationalist ally.
It had been welcomed by the United States, the European Union and also by Iraq and Iran, which have significant Kurdish populations.
