Called Europe of Freedom and Democracy (EFD), the group is made up of seven national delegations and 48 MEPs.
Among them are Grillo’s Five Star Movement (M5S), whose members last week voted overwhelmingly to join EFD following an online referendum.
But some commentators have cast doubt on the partnership.
“Ukip and M5S don't share much in common in terms of ideology, voter base or issue priorities,” Robert Ford, a lecturer in politics at the UK’s University of Manchester, told The Local by email.
“The only things they seem to agree on is they don't like the EU, and they are hostile to the traditional political establishment. That's not a lot to build a partnership on.”
That said, the parties “might not need a lot in common” if their goal is to primarily disrupt EU working practices, added Ford.
“I can see how both Farage and Grillo would see value in a strategic partnership of this kind, as it could serve their very different domestic audiences equally well.”
Ford said the greater difficulty might come with the M5S supporters, “as they have a stronger decision-making role within the party”.
“Ukip supporters are unlikely to know much, or care much, about the M5S, although Grillo's interesting back story may be useful to the party as a boost to their legitimacy as a voice of outsiders.
"However, Ukip's contentious politics on immigration, in particular, may be hard for the M5S's younger, often quite cosmopolitan and outward looking supporters, to swallow.”
Farage said in a statement on Ukip’s website that the new group will “undertake to be the peoples’ voice”.
He added that the team “will be on the front-line working for the restoration of freedom, national democracy and prosperity across Europe”.
“Expect us to fight the good fight to take back control of our countries’ destinies,” he continued.
“We have struggled against much political opposition to form this group and I am sure it will operate very well. Now it is formed I expect other delegations to join soon.”
Meanwhile, Grillo hailed the move as “a great victory for direct democracy”.
Seventy-eight percent of almost 30,000 Grillo party members opted to forge an alliance with Ukip, while just ten percent voted to join the ECR group, which also counts the UK’s Conservative Party among its members.
The poll, carried out last Thursday, came two weeks after Grillo and Farage had lunch in Brussels to discuss an alliance following the outcome of the European elections, which saw Ukip take the majority of the vote in Britain and the M5S come second in Italy.
Farage later said in a statement that if the partnership works out, then “we could have fun causing a lot of trouble in Europe.”
But Grillo, who told Farage “we are rebels with a cause, and we shall whistle as we march”, was lambasted over the meeting by some politicians within his ranks.
“It’s a xenophobic party, ours isn’t,” MP Giuseppe Brescia was quoted on the website Giornalettisimo as saying.
EFD also includes Lithuania’s Order and Justice Party, the Sweden Democrats, the Free Citizen’s Party of the Czech Republic, the Latvian Farmers’ Union and an Independent MEP from France.
The group will meet in Brussels on June 24th.