The ceremony which marks the end of 52 years of armed conflict was broadcast live and shown on giant screens in the capital, Bogota, and other large cities.
Farc rebels gathered in a number of camps also followed the broadcast.
Analysis, by the BBC's Lyse Doucet in Cartagena:
There was so much symbolism in this historic signing - a pen made from a bullet to sign the peace deal, the singing of Beethoven's Ode to Joy, everyone dressed in white.
President Santos said this historic moment was a message from Colombia to the world: no more war. "No more war," the crowd chanted in return.
This was the first time Timochenko addressed the nation live on TV. He promised the Farc would give up its guns, and more than that, he asked for forgiveness.
It earned him a standing ovation. That would have been unthinkable not long ago.
But after 50 years of war, many Colombians still aren't ready to forgive. As President Santos put it, the hard work of building peace now lies ahead.
'Welcome to democracy'
Under the deal, the Farc will now become a political party.
The rebels will take part in legislative elections in 2018, and - as part of the peace deal - they will be guaranteed a minimum of 10 seats in Congress for their first legislative period.
President Santos addressed the Farc rebels directly and praised their decision to lay down arms.
"Swapping bullets for votes and weapons for ideas is the bravest and most intelligent decision that any rebel group could take," he said.
"When you begin your return to society (...) as head of state of the homeland that we all love, I welcome you to democracy."
Timochenko said that the rebels would not take up arms anymore.
"War is over, we're starting to build peace," he said before his speech was interrupted by the sound of Colombian Air Force fighter jets flying over the venue.
Looking up startled, Timochenko's worried expression then turned into a smile and he joked: "Well, this time they came to pay their respects to peace and not to drop bombs."
A number of Farc leaders, such Raul Reyes and Mono Jojoy, were killed in bombing raids over the past decade.
Public vote
The peace deal was reached after four years of formal peace talks in the Cuban capital, Havana, which were preceded by two years of secret talks.
But before it can come into force it will have to be approved by Colombians in a public vote scheduled for Sunday.
While recent polls suggest that a majority of Colombians back the deal, there has been vocal opposition to the agreement.
Those in the "no" camp, which is led by former President Alvaro Uribe, say that they do not trust the Farc to stick to their promises.
They are also angry that Farc leaders will be entering Congress without serving time in jail for crimes committed during the conflict.
President Santos has stressed that there is "no Plan B". He said that if the Colombian people were to reject the peace deal, the country would face more conflict.
The Farc's 52-year fight
1964: Set up as armed wing of Communist Party
2002: At its height, it had an army of 20,000 fighters controlling up to a third of the country. Senator Ingrid Betancourt kidnapped and held for six years along with 14 other hostages
2008: The Farc suffers a series of defeats in its worst year
Keep these in mind as you contemplate the direction of the American government over the past 50 years and especially since the Obama election.
The Goals of Communism
(as read into the congressional record January 10, 1963, from "The Naked Communist" by Cleon Skousen)
1. U.S. acceptance of coexistence as the only alternative to atomic war.
2. U.S. willingness to capitulate in preference to engaging in atomic war.
3. Develop the illusion that total disarmament of the United States would be a demonstration of moral strength.
4. Permit free trade between all nations regardless of Communist affiliation and regardless of whether or not items could be used for war.
5. Extension of long-term loans to Russia and Soviet satellites.
6. Provide American aid to all nations regardless of Communist domination.
7. Grant recognition of Red China. Admission of Red China to the U.N.
8. Set up East and West Germany as separate states in spite of Khrushchev's promise in 1955 to settle the German question by free elections under supervision of the U.N.
9. Prolong the conferences to ban atomic tests because the United States has agreed to suspend tests as long as negotiations are in progress.
10. Allow all Soviet satellites individual representation in the U.N.
11. Promote the U.N. as the only hope for mankind. If its charter is rewritten, demand that it be set up as a one-world government with its own independent armed forces. (Some Communist leaders believe the world can be taken over as easily by the U.N. as by Moscow. Sometimes these two centers compete with each other as they are now doing in the Congo.)
12. Resist any attempt to outlaw the Communist Party.
13. Do away with all loyalty oaths.
14. Continue giving Russia access to the U.S. Patent Office.
15. Capture one or both of the political parties in the United States.
16. Use technical decisions of the courts to weaken basic American institutions by claiming their activities violate civil rights.
17. Get control of the schools. Use them as transmission belts for socialism and current Communist propaganda. Soften the curriculum. Get control of teachers' associations. Put the party line in textbooks.
18. Gain control of all student newspapers.
19. Use student riots to foment public protests against programs or organizations which are under Communist attack.
20. Infiltrate the press. Get control of book-review assignments, editorial writing, policymaking positions.
21. Gain control of key positions in radio, TV, and motion pictures.
22. Continue discrediting American culture by degrading all forms of artistic expression. An American Communist cell was told to "eliminate all good sculpture from parks and buildings, substitute shapeless, awkward and meaningless forms."
23. Control art critics and directors of art museums. "Our plan is to promote ugliness, repulsive, meaningless art."
24. Eliminate all laws governing obscenity by calling them "censorship" and a violation of free speech and free press.
25. Break down cultural standards of morality by promoting pornography and obscenity in books, magazines, motion pictures, radio, and TV.
26. Present homosexuality, degeneracy and promiscuity as "normal, natural, healthy."
27. Infiltrate the churches and replace revealed religion with "social" religion. Discredit the Bible and emphasize the need for intellectual maturity which does not need a "religious crutch."
28. Eliminate prayer or any phase of religious expression in the schools on the ground that it violates the principle of "separation of church and state."
29. Discredit the American Constitution by calling it inadequate, old-fashioned, out of step with modern needs, a hindrance to cooperation between nations on a worldwide basis.
30. Discredit the American Founding Fathers. Present them as selfish aristocrats who had no concern for the "common man."
31. Belittle all forms of American culture and discourage the teaching of American history on the ground that it was only a minor part of the "big picture." Give more emphasis to Russian history since the Communists took over.
32. Support any socialist movement to give centralized control over any part of the culture--education, social agencies, welfare programs, mental health clinics, etc.
33. Eliminate all laws or procedures which interfere with the operation of the Communist apparatus.
34. Eliminate the House Committee on Un-American Activities.
35. Discredit and eventually dismantle the FBI.
36. Infiltrate and gain control of more unions.
37. Infiltrate and gain control of big business.
38. Transfer some of the powers of arrest from the police to social agencies. Treat all behavioral problems as psychiatric disorders which no one but psychiatrists can understand.
39. Dominate the psychiatric profession and use mental health laws as a means of gaining coercive control over those who oppose Communist goals.
40. Discredit the family as an institution. Encourage promiscuity and easy divorce.
41. Emphasize the need to raise children away from the negative influence of parents. Attribute prejudices, mental blocks and retarding of children to suppressive influence of parents.
42. Create the impression that violence and insurrection are legitimate aspects of the American tradition; that students and special-interest groups should rise up and use united force to solve economic, political or social problems.
43. Overthrow all colonial governments before native populations are ready for self-government.
44. Internationalize the Panama Canal.
45. Repeal the Connally reservation so the United States cannot prevent the World Court from seizing jurisdiction over nations and individuals alike.
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