The company, called Monet Technologies, will coordinate between Toyota's information infrastructure for connected vehicles and SoftBank's so-called Internet of Things platform that collects and analyses data from smartphones and sensors, the Japanese corporations said in a joint statement.
In the first phase, Monet plans to roll out just-in-time vehicle dispatch services for Japanese public agencies and private companies to meet user demand. Those services include on-demand transportation and corporate shuttles.
By the second half of the 2020s, the joint venture will roll out an on-demand mobility service that will use Toyota's self-driving, battery-operated electric vehicle called e-Palette for various purposes. They include meal deliveries, where the food is being prepared inside the vehicle, hospital shuttles that can conduct medical examinations on board and mobile offices.
Monet will roll out its mobility services in Japan before focusing on future expansion on the global market.
Toyota launched plans for the so-called e-Palette earlier this year and described the concept as a "fully-automated, next generation battery electric vehicle" that can be customized and scaled for various mobility services.
The companies said that the joint venture will start at 2 billion yen ($17.49 million), and will be increased to 10 billion yen in future. They did not specify a timeline.
SoftBank will own 50.25 percent of the joint venture while Toyota will take 49.75 percent. SoftBank Corp representative director and CTO, Junichi Miyakawa, will be president and CEO of the new joint venture.
That news came after Toyota's rival Honda said it was taking a stake in General Motors subsidiary Cruise Holdings as part of a plan for the two automakers to work together and build an autonomous vehicle. Honda will invest $2.75 billion over the next 12 years, which includes paying GM $750 million immediately as it takes a 5.7 percent stake in Cruise Holdings.
Both Toyota and SoftBank are separately developing technologies that are used in self-driving cars and related services.
The two companies have also invested in major ride-hailing firms: Toyota is invested in Uber and Grab while SoftBank backs both firms as well as China's Didi Chuxing.
Automakers around the world are making multibillion-dollar investments and creating long-range plans for rolling out autonomous vehicles. Many of them are teaming up with other companies to share risks, technologies and expenses associated with building self-driving cars since it will take time before those vehicles can be mass-produced and sold for a profit.
Many analysts think the widespread adoption of self-driving cars will start to pick up in 2021 or 2022.
— CNBC's Phil LeBeau contributed to this report.