Top U.S. commander in Afghanistan Gen. Joseph Dunford handed over Parwan, located near the U.S.-run Bagram military base north of Kabul, at a ceremony after signing an agreement with Afghan Defense Minister Bismullah Khan Mohammadi.
"The transfer of the detention facility is an important part of the overall transition of security lead to Afghan National Security Forces. This ceremony highlights an increasingly confident, capable, and sovereign Afghanistan," Dunford said.
The milestone comes a year after the two sides came to an agreement regarding the transfer.
Afghanistan's president, Hamid Karzai, had previously demanded control of the prison as a matter of national sovereignty.
The handover of Parwan Detention Facility was also held up over American concerns that the Afghan government would release dangerous prisoners. A key deal was finally struck, agreeing that prisoners considered dangerous would not be released from the detention center.
According to a senior U.S. official in Washington, the agreement also includes a provision that allows the U.S. and Kabul to work together to resolve any differences. No other details regarding the agreement were publicly released.
The handover should also open the way for a resumption of talks for a bilateral security agreement that would govern the presence of U.S. forces in Afghanistan after 2014.
It is part of an ongoing effort to gradually shift control of the country's security to the Afghans as the U.S. and allies move toward the full withdrawal of combat troops by the end of 2014.
The Associated Press contributed to this report.