European countries have been slow to pool arms know-how, fearing an erosion of their sovereignty.
The deal announced at a Franco-British defence council in Paris goes much further than the usual arms cooperation programmes, with Franco-British missile manufacturer MBDA setting up four joint centres for research in missile technology -- two on either side of the Channel.
The French defence ministry said the agreement paves the way for "real interdependence in a highly strategic sector and industrial streamlining between the two countries."
Defence Minister Jean-Yves Le Drian, in a tweet, called the deal, which is expected to lead to cost savings, "an historic step".
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His British counterpart Michael Fallon said the deal aimed to "extend the boundaries of traditional interstate co-operation, to the advantage of both countries, including by increasing UK and French military capability and promoting competitiveness in exports."
MBDA is Europe's biggest supplier of tactical missiles and the world's second-largest.
A defence source said the accord could serve as a template for boosting cross-Channel interdependency in other sectors.