Square Enix is to create games using Epic's Unreal Engine 3, the popular middleware behind Xbox 360 smash hit Gears of War.
The Final Fantasy and Dragon Quest developer has previously used its own White Engine, recently shown in demonstrations for the upcoming Final Fantasy XIII.
Square Enix will use Unreal Engine 3 in future next-generation console, PC and network titles.
"The complexity of next-generation game systems featuring HD graphics and multicore parallel processing poses a number of technological challenges to our game development," commented Taku Murata, general manager of research and development at Square Enix.
"We can expedite our game development process significantly while allowing extra time and resources to be spent on game design and mechanics by establishing an effective technology platform. We're excited to be partnering with Epic Games in such an important area," he added.
Jay Wilbur, VP of Epic Games, commented: "Square Enix is one of the biggest and most influential companies in the worldwide game business, and having them work with Unreal Engine 3 is a major honour for us and something we're very proud to be announcing."