A logo of Toyota Motor Corp is seen at the company's showroom in Tokyo, Japan June 14, 2016.
The investment, which values Grab at around $10 billion, is one of the largest by Toyota outside its own corporate group.
The deal comes as the auto industry faces a spike in the need for technological prowess with the advent of features such as autonomous driving, while app makers offer passengers the option to forgo vehicle purchases by connecting them with drivers.
Wednesday's announcement deepens Toyota's partnership with Grab, following an earlier, undisclosed investment by the automaker's trading arm past year.More news: Norfolk MP persuaded not rebel on Brexit by prime minister
The two companies already had a relationship: Toyota's trading arm invested an undisclosed amount in Grab previous year.
Toyota's trading arm invested an undisclosed sum in Grab past year.
Ma estimated that Grab will reach over US$1 billion in revenue this year, as its users exceed 100 million in the region.
The investment by Toyota is the largest-ever by an automaker in the global ride-hailing sector, the six-year-old start-up said in a statement on Wednesday. It raised $2.5 billion in its last round in July, resulting in a reported value of $6 billion.
FILE PHOTO: A man walks past a Grab office in Singapore March 26, 2018.More news: Why Angelina Jolie Could Lose Custody of Her Kids to Brad Pitt
"As a global leader in the automotive industry, Toyota's investment in Grab is based on their conviction in our leadership in driving the adoption of new mobility solutions and expanding O2O mobile services, such as GrabFood and GrabPay, in the region", said Ming Maa, president at Grab.
Toyota has installed its driving recorder devices in some vehicles operated by Grab, using the collected data stored in its mobility services platform to analyse driving patterns and develop vehicle services. "We want to be the one-stop mobility platform for users".
Under the agreement with Toyota, one of the Japanese company's executives will join Grab's board of directors, and a Toyota employee will be seconded to the startup full-time as an executive officer.
In a statement, Toyota said the deal "is aimed at achieving connectivity for Grab's rental auto fleet across Southeast Asia, and at rolling out various connected services throughout the region that utilize vehicle data" stored by Toyota.
Toyota Motor Corp has agreed to invest USD1 billion in Southeast Asian ride-hailing firm Grab as a lead investor in the company's ongoing financing round. General Motors Co. and Honda Motor Co. are among carmakers that have invested in ride-hailing applications. Uber acquired 27.5 percent of Grab in exchange for the US firm's Southeast Asian business earlier this year.More news: Woman caught caging kids in pet kennels