Japan and France are to work together to develop a successor to the retired supersonic jet aircraft Concorde.
The iconic plane even got a place in the Queen's golden jubilee
Companies from the countries will split an investment of $1.84m-a-year for research over the next three years, Japan's trade ministry said.
The agreement to develop the new passenger plane was signed at the Paris Air Show, Japan added.
The new plane will have 300 seats and cut the flight time between New York and Tokyo to six hours, reports said.
Japan's trade ministry also said the two sides would work at solving the problems that plagued Concorde, such as noise and high-fuel consumption.
"This is truly significant industrial co-operation," Japan's trade minister Shoichi Nakagawa said in a statement.
"Bringing their respective advantages together... should lead to the ability to offer highly advanced aircraft and services in the future."
The ministry added that Japan had successfully tested an engine that could theoretically reach speeds up to five times the speed of sound.
Concorde flew at mach 2 - twice the speed of sound. It never recouped the huge amounts invested in it by the time it was taken out of service, after 34 years, in 2003.
However, French airline Air France was one half of the Concorde team, and the country will bring its own technological knowledge of the supersonic jet to the table.
The deal also represents a break with Japan's habit of working with US groups in the industry.
"To research closely in this area with the Europeans does represent something new," said Yoshio Watanabe, an official with the Society of Japanese Aerospace Companies which is heading the new initiative in Japan.
However, while Europe's Airbus is currently the world's biggest commercial airliner maker, US group Boeing said it was placed to beat its rival.
BOEING v AIRBUS ORDERS
Qatar Airways - 20 Boeing 777s worth $4.6bn
Qatar Airways - up to 60 Airbus A350s worth $10.6bn
ILF - 20 Boeing planes, including next generation 737, in $2.9bn deal
Kingfisher - to buy "multiple" Airbus aircraft in a deal worth $2.5bn
Jet Airways - 20 Boeing planes worth more than $2.8bn
Jet Airways - 10 Airbus A330s for $1.5bn
GECAS - 20 next generation Boeing 737s worth $1.1bn
GECAS - 10 Airbus A350s worth $1.6bn
ALAFCO -12 Airbus A350s worth $2.5bn
Scott Carson, Boeing head of sales, predicted it would overtake Airbus's four-year lead during the year.
He added that the advance was thanks in part to the creation of a new unit that helps airlines fill gaps in its fleet, which Boeing put in place after losing orders from "a company or two late last year".
The beefed-up sales team has helped Boeing win a number of key orders as it waits for its new 787 Dreamliner to roll off the production line, with companies such as GECAS replacing Airbus jets with Boeing aircraft.
The twin-aisle Dreamliner will not start flying commercially until 2008.
Airbus and Boeing have been involved in a bitter struggle for orders since a slump in the industry began in 2001.
The two are also locked in a trade row over alleged levels of state funding, which has been taken to the World Trade Organization.