The collaboration is planning to develop an Internet speed 5,000 times faster than the current average speed in EU.
The European Commission and Japan have launched a research project called STRAUSS to build 100Gbps internet, which will provide 5,000 times faster internet speed compared to the current average speed of 19.7Mbps in Europe.
The project is one of the six projects planned to be conducted by the two sides which is said to redefine internet architectures to increase the efficiency of networks in carrying data and to address data explosion.
Other projects which will be funded by the partnership include MiWEBA, NECOMA, GreenICN, ClouT and FELIX.
According to the reports, the world generates 1.7 million billion bytes of data per minute. The data traffic volumes have doubled between early periods of 2012 and 2013 and are expected to increase 12 times by 2018.
European Commission VP Neelie Kroes said: "Our Future Internet should know no barriers, least of all barriers created because we did not prepare for the data revolution."
The projects will receive funding of about €18m and address challenges including cyber security, network capacity, storage, high density data traffic and energy efficiency.
The partnership will bring together the European Commission, the Japanese Ministry of Internal Affairs and Communication (MIC), the National Institute of ICT (NICT) as well as European and Japanese tech companies, universities and R&D centres including Orange, Telefonica, NEC, Panasonic, NTT, KDDI, ADVA, STMicroelectronics and Intel.