Both the countries pledged to deepen bilateral trade and investment ties while discussing regional security in the Middle East.
According to the Prime Minister's Office, the leaders described the agreement as the fastest trade pact negotiated in the histories of both countries, saying it would lower tariffs, expand market access for Canadian businesses and create new opportunities for workers.
Canada said the UAE is its largest export market in the Middle East, with two-way trade growing by around 10% annually.
The agreement is expected to give Canadian companies greater access to the UAE's US$700 billion economy while strengthening commercial cooperation across energy, critical minerals, infrastructure, technology, artificial intelligence and development assistance.
Carney and Sheikh Mohamed also discussed ongoing tensions in the Middle East and reaffirmed their shared commitment to promoting regional stability, security and a lasting peace.
The two leaders agreed to remain in close contact as Canada and the UAE continue to expand their strategic and economic partnership.