Russia responded to news of the pact by saying that "grave consequences" would follow, according to Interfax news agency.
"Ukraine's signature... is a defeat for Russia, which had attempted to block these efforts, as it sought to build its own political/economic block," Timothy Ash, head of emerging markets at Standard Bank, said in a note.
He added that Russia's push for the Commonwealth of Independent States or Eurasian Union would now have "much less international standing in the absence of Ukrainian participation."
Georgia and Moldova also signed the deal, known as the Association Agreement and Deep and Comprehensive Free Trade Agreement (AA/DCFTA). Ash said the benefits for the countries signed up to the agreement included greater trade access, better investment and improvements to regulation.
But Ash warned there would likely be repercussions. "Russia is expected to retaliate by raising tariff and non-tariff barriers to Ukrainian trade, and announcing a program of import substitution away from Ukraine."
"This will be very disruptive to the Ukrainian economy, given that around one-third of trade had been orientated towards Russia – with a particular vulnerability for business in south-east Ukraine, currently the focus of separatist movements."