The controversial deal would grant amnesty to separatist activists, who attempted an illegal breakaway in 2017.
In exchange, Prime Minister Pedro Sanchez would get their political support, paving the way for him to remain in power.
But opposition leaders described it as a "giving in to blackmail" by independence leaders, and a sign the country was veering back to a "dictatorship."
The separatist party's founder, Carles Puigdemont, who has been living in exile in Belgium and faces charges as leader of Catalonia during the drive to secede, hailed the agreement as a "change of narrative."
After Sanchez's Socialist Party failed to clinch a majority in a July election, it was clear they would have to do a deal with smaller parties, including the hardline Catalan separatists, to gain the seats needed to form a government.
Without their support - and with the vengeful opposition of the conservative People's Party that controls the senate - Sanchez's Socialists could be paralyzed to pass legislation including budgets, risking a vote of no confidence against him or the forcing of a snap election.
Sanchez's conservative opponents have accused him of putting the rule of law on the line for his own political gain.
Sanchez has secured the backing of two other regional parties, which all but assures him an absolute majority in the 350-member congress in a vote due to take place in the coming days.
Meanwhile, Spaniards have been called to show their outrage in town square demonstrations across the country on Sunday.
One of the more divisive aspects of the proposed amnesty deal protesters are upset with is that it would allow separatist leaders - like Puigdemont - to run for office again.
