The move marks a furtherretreat from international operations for Uber, after it sold its Chinabusiness to local rival Didi Chuxing.
Both firms describe thedeal as a win for their passengers, but analysts warn it could mean higherprices.
Grab is South East Asia'smost popular ride-sharing firm with millions of users across eight countries.
Under the terms of thedeal, Uber will take a 27.5% stake in Singapore-based Grab. Uber's chiefexecutive, Dara Khosrowshahi, will also join Grab's board.
The value of the deal hasnot been made public.
Grab's chief executiveAnthony Tan said the deal "marks the beginning of a new era" in whichthe merged business would be better placed to serve customers.
Uber's Mr Khosrowshahisaid the deal would "help us double down on our plans for growth as weinvest heavily in our products and technology".
The deal marks Uber'sthird retreat after it withdrew from China in 2016 and sold its Russia businessto local firm Yandex last year.
Mr Khosrowshahi has beenpreparing the firm for an initial public offering in 2019.
Uber invested $700m inits Southeast Asia business and another $2bn in China before it sold itsoperations there.
In November, MrKhosrowshahi, said the company's Asian operations were not going to be"profitable any time soon".’
(Published by BBC – March26, 2018)