Speaking in Islamabad after a meeting with President Asif Ali Zardari, Mr Brown said the agreement would boost information-sharing and security at airports.
He said the £6m 'pact against terror' would include anti-car bomb equipment and material to educate people out of becoming extremists.
'The aim must be to work together to do everything in our power to cut off terrorism,' he said.
Mr Brown also said it was time for action not words in tackling the issue.
He arrived in Pakistan following a visit to India as part a brief tour of the region.
The visits are aimed at calming relations between Islamabad and New Delhi following last month's terror attacks in Mumbai that killed at least 170 people.
After talks with Indian Prime Minister Manmohan Singh, Mr Brown said he would pass on the concerns of the Indian people to Mr Zardari.
He said the militant group, Lashkar-e-Taiba, which is based in Pakistan, was to blame for the Mumbai attack.
