European aerospace giant Airbus will take a majority stake in Bombardier's marquee C-Series airliner programme.
The announcement comes as the Canadian firm battles against a preliminary tariff ruling in the US.
The agreement aims to allow for significant production savings on the C-Series aircraft and to make use of Airbus's international reach for sales.
The trade dispute between US aerospace firm Boeing and Bombardier has raised fears for jobs at Bombardier's plant in Belfast, where it employs more than 4,000 people.
US authorities recently imposed 300% tariffs on imports of Bombardier C-Series jets after Boeing claimed the company was receiving illegal state aid from the British and Canadian governments.
British Prime Minister Theresa May and Canadian Prime Minister Justin Trudeau have both raised concerns about the issue with US President Donald Trump.
The agreement between Airbus and Bombardier aims to allow for significant production savings on the C-Series aircraft and to make use of Airbus's international reach for sales, the two groups said in a statement.
"It's a win-win deal for everyone," said Airbus president Tom Enders.
He said: "The C-Series, with its state-of-the-art design and great economics, is a great fit with our existing single-aisle aircraft family and rapidly extends our product offering into a fast growing market sector."
"Not only will this partnership secure the C-Series and its industrial operations in Canada, the UK and China, but we also bring new jobs to the US.
"Airbus will benefit from strengthening its product portfolio in the high-volume single-aisle market, offering superior value to our airline customers worldwide."
A deal between the two companies had been mooted previously but discussions stalled two years ago and the project was abandoned.
"The single-aisle market is a key growth driver, representing 70% of the expected global future demand for aircraft," according to a statement from Bombardier.
"Ranging from 100 to 150 seats, the C Series is highly-complementary to Airbus' existing single aisle aircraft portfolio, which focuses on the higher end of the single-aisle business (150-240 seats)."
