US President-elect Donald Trump accused the Chinese of "stealing".
"We should tell China that we don`t want the drone they stole back - let them keep it!" he tweeted.
The incident is among the most serious military confrontations between the two powers for decades.
The Pentagon said the drone, known as an unmanned underwater vehicle (UUV), was being used to carry out scientific research at the time it was captured and demanded its immediate return. It warned China not to repeat such a move in the future.
But a spokesman said later on Saturday that an agreement had been reached.
"Through direct engagement with Chinese authorities, we have secured an understanding that the Chinese will return the UUV to the United States," Pentagon spokesman Peter Cook said in a statement.
The Chinese defence ministry said the vessel would be returned in an "appropriate manner". It is not clear when this might happen.
It criticised the earlier US response, calling it "inappropriate and unhelpful".
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