Virgin and Delta on Tuesday said under the joint venture they would share costs and revenues on routes between Britain and North America.
The pair plan to cooperate on services between New York and London, with a total of nine daily round-trip flights from London Heathrow to John F. Kennedy International Airport and Newark Liberty International Airport.
"Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the U.K., particularly on the New York-London route, which is the largest airline route between the U.S. and Europe," said Delta Chief Executive Richard Anderson.
The airlines said they would file an application with the U.S. Department of Transportation for competition clearance and that the deal would need to be reviewed by the U.S. Department of Justice and the European Union's competition regulator.
The deal will enable Delta to expand at London's Heathrow airport, a lucrative hub for corporate passengers where landing slots are generally hard to acquire. Virgin is the second-largest carrier at Heathrow after IAG's British Airways.
Heathrow, Europe's busiest airport, is operating at close to full capacity after Britain's coalition government blocked its expansion in 2010.
British entrepreneur Richard Branson said he would retain his 51 percent stake in Virgin Atlantic and maintain the brand of the airline he founded in 1984.
"The partnership allows both carriers to offer a greatly expanded network at Heathrow and to overcome slot constraints, which have limited the growth and competitive capability of both airlines," said Branson.
The two carriers will operate a total of 31 peak-day round-trip flights between the U.K. and North America, 23 of which operate at London Heathrow.
The partnership will be similar to that operated by American Airlines and IAG's British Airways (BA) since 2010 on transatlantic and some European routes.
Singapore Airlines bought 49 percent of Virgin Atlantic for $965 million in 1999, but has been open to selling its stake since at least mid-2011 when a price of $500-$600 million was mooted in markets.
Singapore Airlines has been refocusing on its key markets where it is under pressure from budget airlines, launching its own budget carrier, Scoot, to ply Asian middle-distance routes and bolstering its Asian regional carrier, SilkAir.