A statement from Huawei said the deal was agreed during a meeting in Moscow between Chinese President Xi Jinping and his Russian counterpart, Vladimir Putin.
MTS said the agreement would include developing 5G technologies and the rollout of a pilot 5G network in 2019-20.
The Russian firm is the biggest mobile operator in Russia and the Commonwealth of Independent States, with more than 100 million mobile subscribers in Russia, Belarus, Ukraine and Armenia.
MTS president Alexey Kornya said: "As a result of our long-term mutually beneficial relationship MTS and Huawei continue strengthening their position in their respective markets.
"Today's agreement designed to promote 5G brings our partnership to a brand-new level – we both add momentum to strategic co-operation between the two companies in high tech, thus building a foundation for commercial 5G rollouts in Russia in the nearest future, and promote further development of business relationships between Russia and China.'
Huawei rotating chairman Guo Ping said: "We are delighted to sign this new agreement with MTS, especially in this vitally important field of developing 5G. The fact that both Russian and Chinese presidents were present at the ceremony was yet another testament to the importance of Russia and China's co-operation in technology.
"Huawei has vast experience in 5G technology development, as it leads the way to the 5G era. Huawei has more than 16,000 5G-related patents, which makes it number one worldwide. We hope that our joined efforts will help Russia enter the 5G era sooner.'
Under the agreement, the two companies will:
- Consult in efficient and effective use of a frequency spectrum;
- Launch Gigabyte LTE areas with high access speed and network capacity;
- Deploy LTE Evolution networks with extra-low delay;
- Launch 5G networks for fixed wireless access;
- Launch 5G NR in MTS' commercial network;
- Co-operate to develop a 5G business case (Robot ARM);
- Implement IoT solutions for manufacturing, smart cities, utilities and agriculture;
- Co-develop and deploy a 5G network segment (factoring in spectrum distribution);
- Implement 5G application scenarios (including smart cities, smart manufacturing and self-driving vehicles); and
- Create test areas with 5G networks in sophisticated infrastructure facilities (high-speed trains, subways, apartment blocks, etc.).
Huawei has been hit by a US ban imposed in May that prevents it from using American components in its products. Soon after it was put in place, Washington relaxed the ban until August.
China and the US have been involved in a tit-for-tat trade war for almost a year now.
A trade deal that looked likely last month, now looks unlikely unless Xi and US President Donald Trump reach some kind of agreement during the G20 leaders' summit at the end of June.