The semi-autonomous rover will collect lunar soil that contains oxides, and using separate equipment, NASA will aim to extract oxygen from the soil.
The government says it is a key step towards establishing a sustainable human presence on the Moon and supporting future missions to Mars.
Up to $50 million in funding will be available to Australian teams developing the rover through the government’s Trailblazer program, and will form one component of the $150 million Moon to Mars initiative.
No Australian has ever step foot on the Moon.
Prime Minister Scott Morrison said it was just one step towards Australia innovating in the “space economy”.
“This is an incredible opportunity for Australia to succeed in the global space sector, and is central to our government’s vision to secure more jobs and a larger share of the growing space economy,” Mr Morrison said in a statement.
“By 2030, we want to triple the size of our space sector — adding $12 billion to our economy and creating up to 20,000 new, high-skilled jobs — providing more opportunities for Australians and industries.
“Our government has invested more than $700 million in the civil space sector since July 2018, supporting core industries including manufacturing, robotics, engineering, mining and resources.
“This mission to the Moon is just one exciting way that we can create opportunity and jobs for the future, and our government will ensure Australians reap the benefits.”
The rover and its deployment system must weigh 20 kilograms or less and perform its task “with a high level of autonomy”.
NASA Administrator Bill Nelson said the partnership with Australian teams was a continuation of a friendship that stretches back more than 50 years.
“This agreement will serve to strengthen the long-time relationship between the United States and Australia in areas related to space exploration – a relationship that goes back more than half a century to the days of the Apollo program,” Mr Nelson said.
“By working together with the Australian Space Agency and our partners around the world, NASA will uncover more discoveries and accomplish more research through the Artemis program.”
Under the agreement, NASA will fly the rover to the Moon as early as 2026, provided it meets a range of conditions during its development.
Enrico Palermo, head of the Australian Space Agency, said world-leading skills were drawn from expertise in the resources and mining sector.
“Australia is at the cutting-edge of robotics technology and systems for remote operations, which are going to be central to setting up a sustainable presence on the Moon and eventually supporting human exploration of Mars,” Mr Palermo said.