Microsoft will invest an unspecified amount in Grab as the ride-hailing giant adopts the US company's Azure as its preferred platform for cloud services.
Under the five-year deal, the companies will collaborate on technologies including big data, artificial intelligence and connected car platforms.
Grab counts Amazon Web Services among its existing cloud suppliers and has worked in the past with major shareholder Didi Chuxing to adopt new technologies.
Microsoft is trying to catch up with Amazon in winning large business customers for Azure, which runs cloud computing applications and stores data.
Grab, which operates in eight countries, wants the US company's natural language processing capabilities to provide real-time translations for passengers and their drivers.
"We see so many companies that use tech in new, unique ways to build businesses in the region," Ms Peggy Johnson, Microsoft's executive vice-president of business development, said in a joint interview with Grab president Ming Maa. "Together, we can produce a number of new, exciting services we may not even visualise yet."
The Microsoft investment is part of a targeted US$3 billion (S$4.2 billion) of funding that Singapore-based Grab expects to raise by the year end, Mr Maa said. They declined to specify the size of the investment.