Ford Motor is selling a 20% stake in Mazda Motor of Japan.
The troubled US carmaker owns a 33.4% stake in Mazda. The move will reduce it to just over 13%.
Ford has been hit hard by falling sales around the world and is seeking to raise cash along with its Detroit competitors.
Shares in Mazda jumped 6.4% on Tuesday on reports about the possibility of the stake sale.
General Motors has sold its 3% stake in Japanese carmaker Suzuki for $US230 million.
The possible sale of a 20% stake in Mazda was first reported more than a month ago.
At that time, the stake was valued at $US850 million. However, based on Mazda's share price on Tuesday, the value of the holding has fallen to $US543 million.
Ford first bought a stake in Mazda in 1979 and took control of the Japanese carmaker in 1996, saving it from potential bankruptcy.
The "big three" US car companies - Chrysler, Ford and GM - are seeking a total $US25 billion in emergency US government loans.