It was signed on 27 September 1422, between the Teutonic Knights and an alliance of the Kingdom of Poland and the Grand Duchy of Lithuania at Lake Melno (German: Melnosee, Meldensee; Polish: Jezioro Mełno), east of Graudenz (Grudziądz).

When Sigismund delivered an unfavorable judgment to the Lithuanians, Jogaila and Vytautas invaded the monastic state of the Teutonic Knights in July 1422, starting the Gollub War.

[3] The Teutonic Knights, led by Grand Master Paul von Rusdorf, were unable to mount a suitable defense.

Each side named eight representatives,[nb 1] gave them full authority to negotiate, and sent them to the Polish Army camp near Lake Melno.

[6] According to the terms of the treaty, the Teutonic Knights for the first time renounced all territorial, political, and missionary claims against the Grand Duchy of Lithuania.

The Prussian–Lithuanian border ran from sparsely inhabited wilderness in Suvalkija, through the triangle north of the Neman River, to Nemirseta on the Baltic Sea.

Lithuania retained access to the Baltic Sea between the towns of Palanga (Polangen)[nb 2] and Šventoji (Heiligen Aa) – a distance of about 15 kilometres (9.3 mi).

[7] However, Lithuania failed to develop harbors in Palanga or Šventoji as there was stiff competition with the nearby established ports of Memel and Libau (Liepāja)[8] and unfavorable natural conditions.

[15] The treaty effectively ended warfare between the Teutonic Knights and the Grand Duchy of Lithuania, which had continued with brief interruptions since the 13th century.

In a telling episode shortly after the treaty had been signed, the Knights and the Poles disputed a watermill in Lubicz, a strategic post that had been turned into a fortress.

[18] The Teutonic Knights attempted to befriend the Lithuanians, offering a royal crown to Vytautas in hopes of breaking up the Polish–Lithuanian union.