The Karachi Agreement is an agreement reportedly reached on 28 April 1949 between the Pakistani government and the government of Azad Kashmir for relations between Pakistan and Azad Kashmir. It defined the division of powers between the two governments and the All Jammu and Kashmir Muslim Conference. By the agreement, azad-cashmere gave the Pakistani government full control of Gilgit-Baltistan (then called “northern zones”) and control over defence, foreign policy and communication issues on its own territory. The 830-kilometre ceasefire line, established in the agreement, began at the southernest point of the Chenab River in Jammu. It took place in a rough arc to the north and then northeast to the coordinate of the NJ9842 maps, about 19 km north of the Shyok River.  With regard to the loss of Gilgit-Baltistan, Snedden Sardar accepts the argument that Azad Kashmir`s physical ties to Gilgit-Baltistan are weak. It was expected that Pakistan would manage it more easily via Peshawar or Rawalpindi.  However, in the years that followed, Azad Kaschmir tried to regain control of Gilgit-Baltistan through various means. In 1972, the Azad Kashmir Legislative Assembly passed a resolution on the recovery of Gilgit-Baltistan.
The intermediate constitution of Azad Kashmir, formulated in 1974, lists gilgit-Baltistan as part of Azad Kashmir. In 1992, the Azad Kashmir High Court admitted a petition and ordered that the government of Azad Kashmir take control of Gilgit-Baltistan. However, the order was challenged in the Supreme Court of Azad Kashmir, which overturned it, although he claimed that gilgit-Baltistan was part of Jammu and Kashmir.  The people of Gilgit-Baltistan would have been outraged by the Karachi agreement because there were no representatives of them who thought that the agreement was the fate of Gilgit-Baltistan.  Christopher Snedden says that the government of Azad Kashmir and the Muslim Conference accepted the agreement because they wanted Azad cashmere to join Pakistan, which they were expecting soon with the promised referendum.