Under the agreement, which was reached Thursday, a gateway and two focal points will be created, with 18 banners attached to streetlight poles for up to three years, according to the city.
The banners and signage will let customers and visitors know they have arrived in the district, which is located on and around Story Road.
"This signage will build on the positive contribution of the Vietnamese community to the richness of San Jose, and supports the success and prosperity of businesses on Story Road west of U.S. Highway 101," foundation spokesman Barry Do said.
The name of the district, which is dominated by the city's Vietnamese community, has been controversial since 2007 when the City Council approved a measure from Councilwoman Madison Nguyen that designated the area as the "Saigon Business District."
A large segment of the city's Vietnamese community immediately began protesting the name, saying the area should be called "Little Saigon" because that was the most popular choice in a survey done by the city's redevelopment agency and would reflect the wishes of the majority of the community.
The protests grew in recent months to a point where an anti-communist crusader famous in the Vietnamese community embarked on a hunger strike outside San Jose City Hall over the naming issue.
The "Little Saigon" name was agreed upon in late March.
"I'm pleased that the city and the foundation were able to work together to achieve the shared goals," planning director Joe Horwedel said.
"The banner locations will meet the community's interest in identification signs in a way that is consistent with existing city policies."