As part of the agreement, Microsoft will customize a version of its Microsoft Reader software for use by Amazon customers. The companies expect to offer digital books through Amazon later this year, a Microsoft representative said.
Amazon and Microsoft representatives declined to give the financial details of the deal or to give a specific date as to when the e-books would be available.
The deal is expected to be similar to the one Microsoft signed with Amazon rival Barnesandnoble.com. Barnesandnoble.com opened the first major online store offering digital books earlier this month, featuring books in Microsoft Reader and other formats.
Microsoft's e-book Reader competes with offerings from Gemstar, NetLibrary and Softlock.com. The Reader software can be used to read books that have been downloaded to portable computing devices. Additionally, a number of organizations, from government agencies to research groups, use Adobe's PDF format to publish digital documents online.
Amazon has already made forays into the digital book business. Horror master Stephen King chose Amazon to handle payments for his online novel "The Plant," which he released in July.
Earlier this year, Amazon teamed with Audible.com to launch an audio book section to its bookstore. The section includes downloadable, digitized audio files of books, magazines, radio programs and speeches.
"Books are at the heart of Amazon.com," Lyn Blake, general manager of Amazon's bookstore, said in a statement. The Microsoft deal "represents another milestone for Amazon.com, demonstrating once again our commitment to offering our customers the widest possible range of products."
Although Amazon is not the first to offer digital books, the company does not feel like it is trailing behind Barnesandnoble.com, Blake told CNET News.com.
"We pay attention to Barnesandnoble.com, but we also pay attention to our customers," Blake said. "We wanted to wait until the timing was right."
Dick Brass, vice president of technology development for Microsoft, said Barnes & Noble's large offline audience prompted the software giant's deal with the bookstore and its online affiliate, Barnesandnoble.com. But just because Microsoft concluded that deal before its agreement with Amazon does not mean that it prefers one over the other, Brass said.
"They are both great companies. We are delighted to have good relations with both of them," he said. "Our goal is to get as much content available to consumers as possible."