In a statement released this week, the British supercar firm said the project will focus on developing new combustion technology that will deliver a higher output per capacity than currently possible, while also aiming to reduce CO2 emissions.
The project is supported and partly-funded by the UK Government through the Advanced Propulsion Centre (APC), and will aid Britain's development of low-CO2 internal combustion engine technology.
Above: McLaren 570GT
Other partners for the project include McLaren Automotive's current engine manufacturing partner, Ricardo, along with Grainger and Worrall will help by providing its expertise in complex, lightweight casting technology.
Lentus Composites will contribute knowledge in specialist composite structures, while the University of Bath will offer their research and development capabilities in internal combustion engine systems efficiency.
Mike Flewitt, CEO of McLaren Automotive, said: "This is an exciting project that plays to the strengths of all partners".
"McLaren Automotive has an exceptional reputation for building the world’s finest engines, as showcased by our 'M838T', and its previous category wins in the International Engine of the Year awards."
"We will continue to independently design and build our own engines, and the benefits of this project will help us accelerate the development of our next generation of powertrain, as confirmed in our recently-announced 'Track22' business plan," he added.
There are no details of what exactly McLaren and BMW plan to produce yet, though it's likely the focus on high outputs and low emissions could see a focus on hybridisation - a fitting theme considering the halo cars of both brands are currently hybrids (think P1 and i8).
Stay tuned to CarAdvice for more updates.