Libya's UN-backed government will receive €200m ($215m, £171m), including funding to reinforce its coastguard.
Most of the thousands who make the dangerous crossing over the Mediterranean to Italy are from African countries.
The EU hopes Libya will be better able to disrupt people-smuggling networks and turn back migrant boats.
But human rights groups have voiced concern at the EU's strategy, and the UN-backed government in Libya has limited control over its own territory.
Hundreds of thousands of migrants try to reach Europe each year. Many of them drown while crossing the Mediterranean.
On Thursday, Italy's coastguard said more than 1,750 migrants had been rescued in the Mediterranean within 24 hours.
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