Ocado boss Tim Steiner said it was a "transformative" deal that would see the two firms build an expected 20 automated warehouses in the United States over the next three years.
Ocado, which already works with Sweden's ICA, Canada's Sobeys and France's Casino (as well as Morrisons in its home market), said it had agreed a contract that could see Kroger open up to 20 automated warehouses in the U.S. over the next three years.
Kroger has almost 2,800 shops across 35 U.S. states and annual sales of $122bn in 2017.
US-based retailer Kroger will be using Ocado's Smart Platform technology to power its online food and grocery deliveries.
As part of the deal, Kroger will take a stake in the British company, equivalent to 5 percent of the existing share capital valued at 183 million pounds, Ocado said.
"This is a huge opportunity to redefine the grocery experience of Kroger's customers and create value for the stakeholders of both companies", says Tim Steiner, chief executive, Ocado.
It takes Ocado's home-delivery platform into the USA for the first time and marks the fourth major deal it has signed with supermarkets around the world in six months. It has struck partnerships with Groupe Casino in France, Sobeys in Canada, and ICA Group in Sweden. It could be a bumpy day for those in the City who have bet on Ocado shares falling.
Tatton-Brown said the detailed financial terms still had to be agreed, but the deal was expected to be neutral in respect to earnings in the full-year 2018. The $20 billion US supermarket will have exclusive USA rights to use Ocado's food-delivery technology and will take a 5 percent stake in the United Kingdom company. "That position now looks like a badly busted flush".