The agreement includes an exclusive contract for Powertrain, MG Rover's engine and gearbox subsidiary, to supply all power unit requirements for Caterham Cars.
Additionally, Caterham will be able to use MG Rover's powertrain technology related to the investment in K-series engines.
Gordon Poynter, Powertrain's commercial director, said: 'Caterham has been using K-series for over 10 years in extreme performance conditions. We are delighted that as a result of proven reliability, technology and cost, they have decided to appoint us as their exclusive supplier.'
The arrangement also allows Caterham to use MG Rover's XPOWER branding on its racing and high performance road cars.