Under the 1.488 trillion won deal, Airbus Defence and Space will supply four A330 MRTT aircraft by 2019 to South Korea's air force.
The A330 MRTT, a military derivative of the A330-200 airliner, was selected over Boeing's KC-46A, the state agency said.
It is South Korea's first introduction of the mid-air refuelling aircraft which would allow jet fighters to take off with more loads of weapons.
The Defence Acquisition Programme Administration said the Airbus model received good marks in its price and performance as well as the amount of personnel and cargo it can carry.
Australia, Britain, the UAE, Saudi Arabia and Singapore have adopted the Airbus tanker designed as a dual-role air-to-air refuelling and transport aircraft.
South Korea's military procurement needs, especially where the air force is concerned, have overwhelmingly been met by US suppliers in the past -- a reflection of their close military alliance.
But European companies led by Airbus have also secured a series of military contracts.
In 2005, Airbus Helicopters won a contract for transport choppers called "Surion" in partnership with Korea Aerospace Industries (KAI). South Korea unveiled the first Surion helicopter in 2009.
In March this year, Airbus Helicopters inked a deal worth 1.5 billion euros ($1.6 billion) to build more than 300 civil and military helicopters for South Korea also in partnership with KAI.
The March deal is part of a South Korean military project to replace its ageing fleet of McDonnell Douglas' 500MD light helicopters, which have been in service for decades.
The Airbus A330 Multi Role Tanker Transport (MRTT) Aerial Refuelling (AR) and Air Transport (AT) aircraft.