Specifically, the two companies are working on optimised field programmable radio frequency (FPRF) transceivers, digital RF and baseband ICs.
The aim is to help system designers reduce their overall costs, lower power, shorten time to market and customise designs for key wireless infrastructure, enterprise, military, industrial, test and medical applications.
As part of the agreement, Altera has also made an equity investment in Lime Microsystems.
"We are pleased to have Altera as both an investor and strategic partner," said Ebrahim Bushehri, Lime's CEO. "Altera's leading edge technology, strong industry reputation and diverse customer base will allow us to quickly expand our business by providing complete field programmable RF and digital solutions to our customers worldwide.
"As the Internet of Things and next generation wireless networks take shape, our partnership will result in customers using programmable RF and FPGA technologies to accelerate their time to market and develop solutions that support existing and emerging wireless standards as well as proprietary wireless communication systems."
The two companies also plan to work on reference designs for enterprise wireless networks, small cell carrier grade infrastructure, military communication systems, software defined radio and M2M applications in the industrial, test and high end consumer space.
Jeff Waters, senior vice president for Business Units at Altera, commented: "We have been working with Lime Microsystems over the last several years and have been very impressed with their technology and the company.
"Combining our technologies, reference designs and technical resources will provide even more rapid and expanded market adoption of Lime FPRF and Altera FPGA product and solution offerings."