The agreement announced on Tuesday by Nvidia and Volvo, the world's second-biggest truckmaker after Daimler, is a long-term partnership spanning several years. Work will begin immediately in Gothenburg, Sweden and Santa Clara, California.
Volvo, which demonstrated its first autonomous truck last year, said the partnership would develop a flexible, scalable self-driving system, which is planned to be used first in pilot schemes before commercial deployment.
"The resulting system is designed to safely handle fully autonomous driving on public roads and highways," Volvo said in a statement.
Nvidia, known for its powerful gaming graphics chips, has been aggressively expanding into the automotive sphere, where trucks — with their regular routes that are easier to automate than cars navigating traffic — may lead the way in self-driving.
Potential demand is strong in the United States in particular, where a shortage of truck drivers has been pushing up freight costs.
Together with Intel, Nvidia dominates the fast-growing AI chip market.
"The latest breakthroughs in AI and robotics bring a new level of intelligence and automation to address the transportation challenges we face," said Nvidia Chief Executive Jensen Huang.
Volvo said last week its self-driving electric truck, "Vera," would begin transporting goods from a logistics center to a port terminal in Gothenburg in collaboration with logistics firm DFDS, in a first step towards operations on public roads.
Nvidia's so-called Drive Constellation chips often power the machine learning used to refine self-driving car software algorithms inside data centers, and the company has also been working to build its Drive chips into cars.
Automotive chips accounted for $641 million of Nvidia's $11.7 billion in revenue in its most recent fiscal year.
Tesla was previously a major customer for Nvidia's automotive chips but last year CEO Elon Musk said the electric-car pioneer was developing its own chip.
AB Volvo's and Nvidia's collaboration will be built on Nvidia's full software package for sensor processing, perception, map localization and path planning. (Reporting by Johannes Hellstrom Writing by Georgina Prodhan Editing by Keith Weir)