The alliance, which comprises Georgia, Ukraine, Azerbaijan, and Moldova, is seen by some as an attempt to counterbalance Russian influence in the Commonwealth of Independent States, the loose alliance of nations that replaced most of the Soviet Union.
Ukrainian President Viktor Yushchenko said at a summit that the new charter set the objectives of cooperation, such as promoting democratic values, ensuring stable development, enhancing international and regional security and stepping up European integration.
He said the Council would be GUAM's main body, which would make decisions "democratically on a consensus basis."
The organization's secretariat will be based in Kiev and Yushchenko said GUAM was open to new members and partners.
The leaders also signed new regulations and a declaration on conflict resolution at the summit.