German luxury carmaker BMW began working on the project with US computer chip giant Intel and the Israeli tech firm Mobileye last year. The group aims to have their first fully automated cars in production by 2021.
German car parts supplier Continental and UK-based auto-equipment maker Delphi have also since joined the collaboration.
"In order to advance autonomous driving technology, it is vital to form partnerships among automakers, technology providers and suppliers," Fiat chief executive Sergio Marchionne said in a statement.
Fiat said teaming up with partners would allow it to benefit from economies of scale, while bringing its own engineering expertise, sales volumes and strong presence in North America to the table.
The BMW-led group plans to put 40 autonomous test vehicles on the road by the end of the year.
Traditional carmakers are scrambling to join the race launched by Silicon Valley firms like Google, Uber or Tesla to create a vehicle that can drive itself in busy, unpredictable urban environments.
Fiat, owner of the Jeep, Alpha Romeo and Maserati brands, has also partnered with Google spin-off Waymo, which added 100 self-driving Chrysler Pacifica minivans to its testing fleet last December.
German luxury carmaker Daimler and auto parts supplier Bosch announced earlier this year that they were working together to create completely driverless cars in the next few years.