Korea will sell 24 FA-50 light combat aircraft to Iraq in a record deal valued at US$1.1 billion including pilot training.
With a follow-up support contract for operation and maintenance of the aircraft over the next 25 years, the total value of the deal is expected to reach more than $2.1 billion.
Korea's biggest arms export deal so far was $1.08 billion for three submarines to Indonesia in 2011.
Korea Aerospace Industries president Ha Sung-yong and Iraqi Prime Minister Nouri al-Maliki agreed the deal in Baghdad on Thursday. Senior officials from both sides signed a contract in Seoul at the same time.
KAI will deliver all 24 aircraft by October 2016.
The FA-50 was developed based on the homegrown T-50 supersonic advanced trainer. It can fly at a maximum speed of Mach 1.5, carrying 4.5 tons of arms, including air-to-air and air-to-ground missiles.
KAI is also seeking to sell the T-50 series to the Botswana, Peru, the Philippines, Peru and the U.S.