The deal was announced at a joint press conference in Washington by Acting Secretary of Homeland Security Kevin McAleenan and Salvadoran Foreign Minister Alexandra Hill.
The agreement -- which will only go into effect after both countries have implemented new border security and asylum processes -- is the latest step by Donald Trump's administration to curb immigration to the US by leaning on neighbours to take in migrants.
Refugee and migration advocates have condemned the deal.
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Cesar Ríos, of the Instituto Salvadoreno del Migrante (Insami), said it implied El Salvador supported the highly controversial US immigration policies, and made his nation part of a "containment strategy."
But McAleenan said the potential of the agreement was that migrants crossing El Salvador could seek protection there, and that "the core of this agreement is to recognise the development of an asylum system in El Salvador and help them develop that capacity."
He said the deal adds to the "good work" the US is already doing with Guatemala, which with El Salvador and Honduras make up the Northern Triangle of Central America, which has seen a mass migration to the United States by people fleeing poverty and violence.
Last year Trump declared a "zero tolerance" policy on Mexico's border in the face of the growing arrival of undocumented immigrants, mostly families from Central America.
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