Mr Sunak signed the devolution document alongside the leaders of Leeds, Bradford, Kirklees, Wakefield and Calderdale councils at the University of Leeds Nexus building this morning.
It came after an agreement between government and West Yorkshire leaders was announced in the Budget yesterday, bringing to an end a five year saga over the transfer of powers and funding from Whitehall.
The metro mayor elected in 2021 will have control of a £63m annual adult education budget, a host of new decision-making powers and a guaranteed £1.1bn over the next 30 years in a new West Yorkshire Investment Fund.
Speaking before the document was signed with local leaders and Local Government Minister Simon Clarke, Mr Sunak said the breakthrough was "the start of something new and exciting".
He said: "Yesterday was a big day for the country, today is an enormous day for West Yorkshire.
"To everyone who's been working hard on this, I say thank you and also congratulations for what you're doing here today.
"You're going to set an example for the country to follow. Exciting things are going to happen here. When we talk about levelling up as a government, this is levelling up in action.
"This is trusting local areas to seize their destiny in their own hands, supported by government with investments in infrastructure, in cultural institutions in economic support.
"That's what this partnership is about, and when I see about all the plans that you've got ready to go, I'm excited about the future of your region.
"I can't wait to work with you all in partnership over the next few years to bring those ideas to life and everyone is going to benefit as a result. So congratulations, well done, and let's get forward together."
Bradford council leader Susan Hinchcliffe said the deal was "going to enable us to fulfil a lot of the ambition that we have".
She added: "We've got pipeline of projects that we need to deliver and this lets us get on with that. This is just the beginning though for us. This is the start of us creating a region where everybody can feel success from Keighley to Kippax and beyond.
"And we're really keen to get started. So thank you to Chancellor striker and the Minister for their constructive negotiations with us."
Now that the deal has been signed it will need to be agreed by each individual authority and go out to consultation before it can be made law in Parliament.
Wakefield leader Denise Jeffery said she hoped this could be done by September and that West Yorkshire would be able to take advantage of its devolved status by bidding for funding from government pots they would not previously have had access to.
Earlier, Mr Sunak visited Leeds station and Leeds General Infirmary, to see the hospital's testing facilities for covid-19.