The new travel website is targeting the upmarket family market and is possibly the first of a number of online deals between the two firms.
It is a chance for the two to cross-sell to each other's customers, with Lastminute getting access to Tesco's upmarket families and Tesco to the online travel site's affluent young professionals.
The deal comes on the back of a buoyant set of results for Lastminute, as it last week reported pre-tax profits up to 拢1.6m, compared with a loss last year of 拢4m.
Brent Hoberman, chief executive at Lastminute, said: "This is about the country's top two etailers getting together and providing complementary services. This could be seen as the first step to an number of other things we can do with Tesco."
He told the Sunday Times that because of the high brand awareness, he was confident it was a good deal.
The two have held a number of talks over the last two years about a possible deal before finally launching the new travel venture.
John Browett, chief executive of Tesco.com, said: "This is about getting more services to the distinct customer group that uses Tesco.com. Our customers do take one big expensive holiday a year, but they also take week and weekend breaks and cheap sun holidays throughout the year as well."
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