The water pact follows blockades at the mine this year over trucking contractor and water issues, with Newmont saying earlier the disruptions were expected to impact the company's full-year results.
"Having reached agreement on this pivotal issue, we look forward to continuing our good-faith dialogue to resolve the remaining issues so we can move from confrontation to cooperation," president and CEO Tom Palmer said.
Newmont said the infrastructure solution with Cedros, one of its 25 neighbouring communities in Zacatecas, secured sustainable water availability for the community's domestic and agricultural uses.
The miner said the plan included additional water wells and infrastructure which would supplement the 600,000 litre-per-day reverse osmosis drinking water plant and wells the company built in 2018 and continued to operate.
"As part of the agreement, the municipality will participate in the operation of the new water facilities to be built by Peñasquito as the public water system and the distribution networks will ultimately be owned by the municipality," Newmont said.
Peñasquito was one of the Goldcorp assets Newmont acquired in the April company merger.
Newmont said last month its North America attributable gold production was expected to be 1.1 million ounces in 2019, including the impact from the blockades at Peñasquito, the conveyor fire at Musselwhite, installation of additional safety controls at Red Lake, and lower grades in the third quarter at Éléonore.
Musselwhite, Red Lake - which is being sold to ASX-listed Evolution Mining - and Éléonore were also Goldcorp operations.
From this month, the gold major has started referring to itself as Newmont rather than Newmont Goldcorp.
Newmont shares touched a one-year high of US$41.41 on Friday closed up 0.4% to $41.29, capitalising it at $33.85 billion.