Horst Seehofer has previously insisted on taking unilateral steps in order to strengthen the country's borders and stop the massive influx of migrants.
The bitter dispute with German Chancellor Angela Merkel over migration is history, Seehofer said, stressing that the government is on course to diminish support for the right-wing party Alternative for Germany.
German Interior Minister Horst Seehofer, who asked for a tougher approach to the migration issue, told Sunday's Bild am Sonntag the agreement sends "a signal to the world that illegal migration is no longer worth it."
After a delay that threatened the governing coalition, leaders of the two parties agreed to turn back refugees who have already applied for asylum in other European countries under bilateral deals that have not yet been reached.
Seehofer had issued an ultimatum to Chancellor Merkel requiring that the migration issue be resolved, threatening to resign otherwise. German lawmakers have said that such an ultimatum could lead to a collapse of the ruling coalition.
The CDU and SPD later reached an agreement to return certain migrants to the countries where they first applied for asylum, in cases where such bilateral agreements have been reached with other EU member states.