The agreement means YouTube will pay a blanket fee for music to be used in its partners' professional sites and in amateurs' videos, which is similar to the system that many radio and television broadcasters use.
The Alliance will then decide how to distribute the revenues to its members, based on an estimate of what music is used on the site.
The two groups will work on how to identify the high-profile songs that are used most often as background in professional and user-generated videos.
Steve Porter, chief executive of the MCPS-PRS Alliance, said: "This is the first fully formed agreement."
This deal marks a further attempt by YouTube to appease owners of media content, who have been concerned about the amount of pirated material available on the site.