France and Libya will sign contracts worth about 10 billion EUR(US$14.7 billion), including for armaments and a nuclear reactor.
President Nicolas Sarkozy described the contracts as rewards for Tripoli's improved behavior.
The Libyan leader, long known as the champion of armed struggle and a sponsor of state terrorism, is seeking a fresh start on the world stage after doing away with weapons of mass destruction and making amends for terror attacks.
"We must encourage those who renounce terrorism, who renounce the possession of nuclear arms," Sarkozy said after a meeting with Gadhafi.
He did not elaborate on the accords for a civilian nuclear reactor for a desalination plant and armaments. A signing ceremony was scheduled for Monday evening. One of Gadhafi's sons told French daily Le Figaro that a 3 billion EUR(US$4.4 billion) deal to buy Airbus jets was also on the agenda.
Gadhafi's visit brought protests and complaints, including from Sarkozy's own minister for human rights.
Sarkozy is the first Western leader to extend an invitation to the flamboyant "guide of the Libyan revolution" since his falling out with the West in the 1980s.
"France must speak with all of those who want to return to the road of respectability and reintegrate the international community," Sarkozy said.
Gadhafi was castigated by French politicians, philosophers and others before his plane touched down on International Human Rights Day. Police detained a group of nearly 30 protesters at Paris' human rights plaza, according to AP Television News.
Human Rights Minister Rama Yade expressed disgust with the symbolism of the chosen date.
"It would be indecent, in any case, that this visit be summed up with the signing of contracts," she said in an interview published Monday in the daily Le Parisien. For France to avoid "the kiss of death," it must ensure respect for human rights in Libya, she said.
"Col. Gadhafi must understand that our country is not a doormat."
Sarkozy said later that he had stressed to Gadhafi the need "to progress on the road to human rights." As for Yade, the president said that as human rights minister her convictions were "perfectly normal" and he shared them.
Yade's boss, Foreign Minister Bernard Kouchner, suggested he was resigned to the visit, calling it a way to "return to normal relations" with Libya.
The trip "will, I hope, allow us to highlight this country's return to the international community," Kouchner told France Inter radio.
Sarkozy wants to keep France in the running for hefty contracts in oil-rich Libya but also to send a signal to countries like Iran, involved in a standoff over its disputed nuclear program, that benefits await those who abide by international rules.
Gadhafi last visited France in 1973. He took his first step toward ending years as an outcast in a meeting with European Union officials in Brussels in 2004, a year after announcing he was dismantling Libya's clandestine nuclear weapons program.
Last week, France signed a nuclear cooperation accord with Algeria, Libya's neighbor in North Africa. There, Sarkozy said sharing civilian nuclear technology with Muslim nations "will be one of the foundations of a pact of trust" the West must conclude with Muslim nations.
Gadhafi's visit follows his decision in the summer to free five Bulgarian nurses and a Palestinian doctor who had spent eight years in Libyan jails on allegations that they had contaminated more than 400 children with the AIDS virus. The release was the final obstacle to normalizing ties with the pariah state.
The six were released after mediation by the EU and Cecilia Sarkozy, the former wife of Sarkozy, who negotiated with Gadhafi. Sarkozy then traveled to Libya. The Sarkozys have since divorced.
Libya started to move back into the international fold - and undo U.N. sanctions - with its 2003 decision to dismantle its clandestine nuclear arms program. The same year it paid US$2.7 billion to families of the victims of the 1998 Pan Am bombing, then agreed to pay US$170 million in compensation to the families of the 170 victims of the 1989 bombing of a French UTA passenger jet.