Under the agreement, while JMM will have its Chief Minister in the state, Congress has secured a lion's share of the 14 Lok Sabha seats. While Congress will contest on 10 seats, JMM will get four seats.
This was announced by JMM leader Hemant Soren, who will be the Chief Minister of the Congress-JMM coalition government in Jharkhand.
He made the announcement after a meeting with AICC general secretary in-charge for Jharkhand B K Haripasad in the Congress headquarters.
The alliance is not confined to Jharkhand as both parties have decided to contest the next Lok Sabha polls together in West Bengal, Odisha, Bihar and Chhattisgarh as well.
The symbolism was not lost as Soren's father Shibu Soren is considered a key tribal face in the country and tribals are in substantial number in these states especially in Chhattishgarh and Odisha. While Chhattisgarh goes to assembly polls this year, Odisha polls will be held along with Lok Sabha elections due next year.
"When allies are deserting NDA, new parties are coming to UPA," Haripasad told PTI.
In a party statement, Hariprasad said that both parties decided to form the alliance to "protect and promote secular and progressive values and to ensure the further empowerment of the weaker sections of society."
The tribal-dominated state was under President's Rule since January 18 after the collapse of the Arjun Munda-led BJP government as JMM withdrew support from it on January 8.
President's Rule expires on July 18.
Congress and JMM had fought 2004 Lok Sabha polls together with CPI and RJD also being the part of the grand alliance, which had secured 13 of the 14 seats then. In the next election in 2009, when they fought separately, Congress could win one and JMM only two.