The purchase would give Renault a premier distribution system in Asia as well as access to Nissan's superior technology in engines, suspension, batteries and fuel cells.
Nissan would get a desperately needed cash infusion, better European distribution and management talent.
A main condition of the alliance would be Renault's acquisition of an equity stake in Nissan of "approximately 35 percent," said a brief Renault statement. A stake of more than 33.4 percent would give Renault veto power over Nissan's decisions.
While terms were not disclosed, Renault is expected to invest more than $4 billion in Nissan, according to a Nissan executive in New York, who spoke Monday on condition of anonymity. That would be a premium to the current market value of a one-third stake in Nissan, about $3.37 billion.
Nissan said Tuesday it had decided to negotiate exclusively with Renault. Its board will meet to consider the offer on Friday.
"We will work out conditions for forming an alliance in the days ahead so that a conclusion can be reached by the end of this month," said a statement from Yoshikazu Hanawa, president and chief executive of Nissan.
Renault's plans would have to be approved by a Renault Employee Council.
Nissan's Hanawa and Louis Schweitzer, Renault's chairman, hammered out the agreement over the weekend in Paris. Nissan turned to Renault after negotiations with Daimler-Chrysler collapsed last week.
Nissan, best known in the United States for its sleek sports cars, has struggled to turn around sagging market share with family sedans like the Altima and minivans like the Quest.
Nissan's fiscal year ends on March 31, and the company's North American operations are expected to break even, a dramatic improvement from a $700 million loss in 1998.