China has described the deal as an "extremely irresponsible" threat to stability in the region.
Australia has formally embarked on a hotly-contested programme to equip its navy with nuclear-powered submarines in a new defence alliance with Britain and the United States.
Defence Minister Peter Dutton joined US and British diplomats in signing an agreement allowing the exchange of sensitive "naval nuclear propulsion information" between their nations.
It is the first agreement on the technology to be publicly signed since the three countries announced in September the formation of a defence alliance, AUKUS, to confront strategic tensions in the Pacific where China-US rivalry is growing.
"The agreement will permit cooperation, which will further improve our mutual defence posture," US President Joe Biden said in a statement on Friday ahead of Dutton's signing ceremony in Canberra with US Charge d'Affaires Michael Goldman and British High Commissioner (ambassador) Victoria Treadell.
Australia to obtain eight nuclear-powered submarines
Under the AUKUS deal, Australia would obtain eight state-of-the-art, nuclear-powered submarines capable of stealthy, long-range missions. It also provides for sharing cyber, artificial intelligence, quantum and unspecified undersea capabilities.
The agreement has angered China, which describes it as an "extremely irresponsible" threat to stability in the region.
It has also infuriated France, which discovered at the last moment that its own diesel-electric submarine contract with Australia—recently estimated to be worth $65 billion—had been scrapped.
Australian Prime Minister Scott Morrison has been unapologetic about his handling of the agreement, insisting it was in his country's national interest and that he knew it would "ruffle some feathers".