Under the terms of the agreement, Ocado will launch “end-to-end” solutions for ICA’s online grocery services, including a website and the construction of an automated warehouse designed for ecommerce.
The online specialist will invest in installing internal infrastructure at the warehouse, as well as “robots”.
ICA has around 1,300 stores across Sweden and a market share of 36%, with sales of 106.5 billion Swedish krona (£8.9bn) in 2017.
ICA and Ocado will develop their first “customer fulfilment centre” in the Greater Stockholm area, the two companies said on Wednesday.
The online firm was under pressure over a delay in clinching an international deal after missing a self-imposed deadline of the end of 2015 to expand overseas.
But the Swedish deal is the latest in a string of overseas partnerships Ocado has struck in the past year, including one in France with supermarket giant Groupe Casino and another in Canada with Sobeys.
In the UK, Ocado is in bed with Morrisons.
The group expects the Swedish foray to create “significant long-term” value to the business.
Luke Jensen, chief executive of Ocado Solutions, said: “ICA has a strong track record of growth and innovation and our smart platform will give the ICA-retailers the opportunity to provide their customers with new levels of service, convenience and value.
“Our flexible, scalable and modular solution is uniquely positioned to address a fresh set of challenges and allow ICA to deliver its ambitions for online.”