A Hong Kong inquest in 2011 criticised Philippine officials for their slow response to the hijacking
The Philippines and Hong Kong have agreed to resolve years of dispute over a 2010 Manila bus hijacking that killed eight Hong Kong citizens.
In a joint statement, the Philippines expressed "its most sorrowful regret" to the victims and their families.
The wording of the apology appeared to fall short of Hong Kong's original demand but its leader CY Leung said the two sides had reached a "consensus".
The seven tourists and their guide were shot dead by a former policeman.
The vehicle was carrying 22 Hong Kong tourists and three Filipinos when it was hijacked by Rolando Mendoza, who was angry at being sacked from his job.
The hostage drama was broadcast live on television and radio and lasted for 11 hours.
It caused diplomatic strain between the Philippines and Hong Kong, with a Hong Kong inquest in 2011 criticising Philippine officials for their slow response to the crisis.
"The four demands made by the victims and their families on apology, compensation, sanctions against responsible officials and individuals, and tourist safety measures will be resolved and settled," the statement said.
"The Philippine government expresses its most sorrowful regret and profound sympathy, and extends its most sincere condolences for the pain and suffering of the victims and their families."
The police director general of the Philippines has also written to the victims and their families, the statement added.
The Philippines has also assured Hong Kong that "measures are being undertaken to hold to account those responsible and to see the outstanding proceedings conclude as soon as possible".
The Philippines previously said it would not apologise for the hostage crisis, but instead expressed its "deepest regret" over the incident. The victims and their families had long demanded an apology from the Philippine government.
Hong Kong imposed sanctions against the Philippines over the incident, including the removal of visa-free access for Philippine officials and diplomats in February.
Mr Leung said the sanction would be lifted immediately.
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