Nissan is going to buy a 34 per cent stake in Mitsubishi Motors, news that sparked Mitsubishi shares to jump.
However, Nissan shares fell over one per cent.
Mitsubishi is currently trying to attract capital in the wake its admission that its employees falsified data on fuel economy tests in Japan, where both companies are based.
In the wake of the scandal shares in Mitsubishi dropped more than 40 per cent.
"We will help this company address the challenges it faces particularly in restoring consumers’ trust in fuel economy performance," Carlos Ghosn, chief executive of Nissan and Renault, said.
Mitsubishi agreed to sell the stake for ¥237.4bn (£1.53bn).
The announcement comes a day after Mitsubishi tried to reassure shareholders that it has enough cash to see out the scandal.
Yesterday the car manufacturer also said that nine additional models were affected, but that no overseas models had been.
Mitsubishi is just the latest in a number of auto firms caught in a mis-reporting scandal, and has blamed competition, as well as insufficient communication with a subcontractor, for its actions.
Still, sales in Japan of Mitsubishi have dropped since the scandal broke.