The alliance will deploy information and communications technology (ICT) to improve citizens' lives where they work and play.
"Ericsson is a global leader with the proven software platforms and technology needed to develop smart cities, making them an ideal fit in this effort," Mike Zeto, general manager of smart cities, AT&T IoT solutions, said in a statement.
"Together we can help cities enhance the lives of their citizens by saving them money, conserving energy, improving quality of life and further engaging with residents," Zeto added.
The alliance will support AT&T's new smart cities framework, which is aimed at helping cities better serve their citizens and would work with local US universities to build smart city environments called "spotlight cities."
The framework will be deployed in many US cities with a focus on infrastructure, citizen engagement, transportation and public safety.
"Our collaboration with AT&T will help create the cities of the future in which citizens are safer, healthier and better prepared to handle the challenges of daily life. We must determine how to integrate disparate infrastructure for the common benefit of society," Orvar Hurtig, head of Industry & Society at Ericsson, said on the alliance.
Ericsson will help to establish smart, sustainable cities by connecting the 100 cities in the world with 4G/ LTE and enabling intelligent infrastructure connectivity.
Ericsson will also invest in safety, transportation and utilities/energy sectors.
The company will also deploy research and sustainability life cycle approach to understand what citizen, business and society value public transportation, inclusion in city planning and smart sustainable city services bring to develop the solutions for tomorrow.
The companies on Wednesday also announced field trials for Connected Water solutions in Atlanta, a city in US state of Georgia, to remotely monitor the quality of the city's water from Chattahoochee river basin.
Ericsson is present at the four-day International Consumer Electronics Show (CES) that starts from January 6 in Las Vegas.