Fiat has formed a joint venture with Chinese carmaker Guangzhou Automobile Group.
The two manufacturers will invest more than 400 million euros in the venture, which is due to start production for China's market in 2011.
Fiat has lacked a carmaking partner in China since 2007, when Nanjing Automobile Corporation pulled out of a venture amid plunging sales.
The Italian manufacturer then agreed a deal with Chery, China's largest carmaker, but that was put on hold earlier this year by the global financial crisis.
Guangzhou Automobile Group also has partnerships with Honda and Toyota, reports Bloomberg.