The project is financed with about EUR1.5 million by the Dutch government, which has pledged to buy a ferry and cover the maintenance costs during the first year of service.
The ferry service across the Danube river was disrupted at the beginning of Serb shelling attacks on Vukovar in 1991. The service is expected to be restored this June.
The agreement was described as an opportunity to renew cooperation and trade between Vukovar and Bac.
The municipality of Bac has a population of 16,000, with the Croats making up the third largest ethnic group.
This was the first time local government officials from Vukovar visited neighbouring Serbia since the end of the war in 1995.