The Australian government will give Malaysia two Customs boats as part of regional efforts to stop people-smuggling syndicates.
Immigration Minister Scott Morrison announced the two Bay Class vessels will be handed over in mid-2015.
Mr Morrison said the boats have a range of 1000 nautical miles and Australia would provide training.
Malaysia was a key partner in regional and bilateral efforts against people smuggling, he said.
"These vessels will offer enhanced search and rescue and interception capacity to the Malaysian Maritime Enforcement Agency's border protection operations," Mr Morrison said in a statement on Thursday.
"This will improve Malaysia's capability to preserve life at sea, while shutting down people-smuggling syndicates."