The Grangemouth petrochemical plant near Falkirk is to stay open after a new deal was struck with workers.
Staff were told in a mass meeting at 11:00 that the decision to close the site would be reversed.
Operator Ineos announced on Wednesday that the plant was to shut, with the loss of 800 jobs, after union members rejected a survival plan.
But on Friday, Ineos said it would reopen the plant and the neighbouring oil refinery "with immediate effect".
The news was welcomed by the Unite union and political leaders.
The company said the move had followed a "dramatic U-turn" by Unite and its "belated recognition" that the company's survival plan was the only way to ensure Grangemouth's long-term future.
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Grangemouth chairman Calum MacLean, right, makes the announcement
It added that Unite had agreed to taking no strike action for three years, moving to a "modern" pension scheme and accepting a three-year pay freeze.
Ineos also confirmed it would invest a further £300m in the site's long-term future.
The company's announcement was greeted by huge cheers from the workforce, who had gathered at the plant to be told of the company's decision.
Unite Scottish secretary Pat Rafferty said: "Relief will ring right round the Grangemouth community, and across Scotland today.
- The dispute first flared up in the summer over the company's treatment of Unite official Stephen Deans, who has worked at Grangemouth for more than 20 years
- He was accused of trying to rig the selection of a Labour candidate for the Falkirk seat at Westminster but was later cleared
- But Ineos has been carrying out its own investigation into claims Mr Deans improperly used the refinery for union business. Its findings are due to be published on Friday
- Unite members at Grangemouth had been due to strike last Sunday over Mr Dean's treatment
- Ineos had closed the plant ahead of the industrial action and said it would not be restarting the facility even after the strike was called off
- It said Grangemouth was losing huge amounts of money and faced going bust unless staff agreed to a survival plan
- The proposals included changes to pay and conditions. They were rejected by about half of the site's workers
- The decision that the petrochemical plant should close was taken at a meeting of Ineos shareholders, including chairman and founder Jim Ratcliffe, on Tuesday
- On Wednesday, the plant's workforce was told of the closure, with Unite describing the move as "catastrophic"
- Hopes for the site's future were raised on Thursday after Unite agreed to "embrace" a survival plan put forward by Ineos management
"Hundreds of jobs that would have been lost can now be saved and £300m will be invested into the plant."
First Minister Alex Salmond described the announcement as a "tremendous fillip for the workforce and the whole Grangemouth community, following what could have been a potential disaster".
He said it had been "a great team effort from all concerned", including the unions and workforce, the management and governments.
"I am delighted that people have rallied round to protect these jobs, and now we can all agree that Grangemouth has an outstanding future," he added.
Scottish Secretary Alistair Carmichael also welcomed the announcement, saying that it was "the news that we all wanted".
"The staff and their families have been through a very stressful and uncertain time," he said.
"They have been through a hell of a week and I hope they have a much better weekend as a result of today's announcement."
Mr Carmichael added: "They can look to the future with an optimism which was absent earlier in the week."
Ineos' future plans include investing a further £300m in the site.
Grangemouth chairman Calum MacLean said: "It is a huge investment and that investment was only rightly to be done if we had a long-term sustainable base.
"What we have now done is given the chemicals business another 15 to 20 years on the back of new raw materials, new contracts and significant investment."
Mr MacLean would not dismiss the prospect of redundancies, but said they would be "very limited". He also denied that the company had demanded any additional concessions from the union.
The company said the Scottish government had indicated it would support its application for a £9m grant to help finance a gas terminal, while the UK government had given "pre-qualification approval" for a £125m loan guarantee facility.
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Alex Salmond says the Grangemouth plant has a "bright future"
Ineos founder and chairman Jim Ratcliffe said it was "a victory for common sense".
He told the BBC that the Grangemouth complex "should have a life for many years to come, as long as we can get this gas terminal built and we can sign up gas contracts and bring gas in from America".
The company has indicated that 2,000 contractors it laid off after shutting down the complex would be re-hired to support investment in its survival plan.
Falkirk Council, which had planned to set up a task force to respond to the threatened closure, said the Ineos announcement was "the best possible outcome for all concerned".
Council leader Craig Martin added: "There has been a tremendous effort behind the scenes to secure the plant's future involving UK and Scottish governments and Falkirk Council, working together to ensure the plant's survival.
"This partnership approach has paid off and a more stable and positive future for the workforce has been delivered."
The closure move came after workers rejected a deal which would have changed their pay and pensions.
Ministers and Unite were involved in top-level talks on Thursday to try to save the site and a fresh offer was made by unions to the company.
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