Banking giant Santander, whose UK head office is based in the city centre, and global bike share specialist nextbike have unveiled the scheme with Milton Keynes Council and Milton Keynes City Centre Management.
Under the scheme, more than 500 bikes will be available for hire at 60 docking stations across Milton Keynes.
nextbike Smartbikes will allow cyclists to hire the bikes via a specially designed app on their phone, with membership cards or via the cycle itself. The scheme will use the 169-mile network of redways around Milton Keynes.
Santander is a major employer in Milton Keynes and already runs its Santander Cycles partnership with Transport for London.
Bank chief executive Nathan Bostock said: “Our plans were always to broaden this commitment into other communities and, as our largest employee hub, Milton Keynes is an obvious place for us to support in this way.
“We will be looking to share best practice between Santander Cycles in London and Milton Keynes, where it makes sense and adds value.”
Cllr Matt Clifton, Milton Keynes Council cabinet member responsible for transport, said: “I am delighted that Milton Keynes has been chosen by Santander for this fantastic scheme and that the council is a key partner in such a positive and innovative transport project.
"A number of council departments are already working closely with Santander, nextbike and MKCCM to deliver this across the borough.”
Milton Keynes city centre manager Melanie Beck added: “A cycle hire facility of this size will be a tremendous addition to Milton Keynes and we believe it will provide employees, residents and visitors with a simple, sustainable and enjoyable way of travelling around this vibrant city.”
The scheme, when it begins, will be the second largest in the UK outside London and will serve the majority of Milton Keynes, including residential areas.
nextbike managing director Robert Grisdale said: “It is fantastic to see such a strong commitment from Santander to bring the project to life in a way that is 100% focused on the community.
“Milton Keynes is very car centric but also very cycle friendly thanks to the redway network so there is an exciting amount of potential to change the way people choose to move around the city. We are really looking forward to being a part of this transformative project.”