DMG Entertainment, a division of Chinese media and entertainment group Dynamic Marketing Group, has signed an agreement for 14-times Gold Medal winner Phelps to endorse the new Mazda 6 model in a series of ad campaigns.
He will feature in television, newspaper and magazine ads, as well as outdoor poster advertising and personal appearances.
The campaign will be created by D3, an advertising division of DMG, and will be unveiled in the first half of 2009 in Greater China.
Phelps said: "The people of China have been very supportive of me and my efforts to help promote swimming. I am excited to begin 2009 with my first return trip to Beijing since the Games.
"I am looking forward to working with DMG and Mazda on my first automotive campaign in China."
Dan Mintz, DMG's chief executive, said: "This deal demonstrates the buoyancy of China's advertising economy.
"China is increasingly looking to elite personalities to endorse domestic and international brands. This is just the first of a number of high-profile partnerships that DMG Entertainment is negotiating that will open a new chapter in China's advertising industry."
Last year Phelps was criticised by health campaigners for his sponsorship of Kellogg's Frosted Flakes instead of the company's healthier Wheaties cereal brand.
He also appeared in an ad for Visa, while his Mum filmed an ad for Johnson's baby powder, shampoo and oils.