The companies have agreed to work together on a new Microsoft SQL server and new Microsoft Exchange database server, according to a Microsoft announcement Monday.
Both new systems will have support for SQL Server 2016, which is a major leap forward for the popular database, which Microsoft acquired in 2015 for more than $1 billion.
Microsoft will pay Oracle $50 million for the agreement.
The companies announced their agreement after an Oracle conference call to announce a $5 million seed round.
Oracle and Microsoft are partners in a major SQL Server enterprise software development platform that Oracle acquired in 2013.
They will also collaborate on new business applications, including Office 365.
Oracle’s SharePoint will be used for Microsoft Exchange, which will be run on the new server.
Microsoft’s Office 365 will run on SharePoint Server 2016.
The two companies will also develop new products and services, including Microsoft’s new Office app for Android, Microsoft’s Azure cloud services and the Azure Marketplace.
The deal follows Oracle’s announcement that it had reached an agreement to merge its Java-based OpenJDK software platform with Microsoft’s Windows Server and Windows Platform for Office software.
In March, Oracle acquired Sun Microsystems, a maker of Oracle Java virtual machines, for $26.7 billion.
Last year, Oracle bought the remaining 30 percent of Oracle’s stake in Oracle Java.