General Electric (GE) and Japan's Hitachi are joining their nuclear operations in the US and Japan to boost business and gain more contracts.
Hitachi, which has been hit by problems with its nuclear turbines, hopes the deal will improve its outlook.
Nuclear power is seen as an attractive alternative to crude oil, which has been rising in price.
The deal comes amid a recent trend of similar alliances, with French nuclear group Areva teaming up with Mitsubishi.
Outlook
Toshiba recently agreed the $4.2bn (£2.2bn) purchase of US firm Westinghouse, a power plant unit of British Nuclear Fuels.
General Electric, the world's second largest firm, already works closely with Toshiba but said a similar joint venture was not on the cards.
GE and Hitachi will each own the majority stake of their new joint venture in their home markets, with GE having a 60% share in the US operations and Hitachi holding 80% of the Japanese business.
The international outlook for Hitachi has been uncertain after its faulty turbines forced the closure of nuclear power units.
After including an expected 38bn yen (£169m) cost to fix the turbines, the firm has forecast a group net loss of 55bn yen for the year to March.
The firm hopes increased orders to construct boiling water reactors will improve its outlook.
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