The agreement to form an 18-member government was signed by two party alliances in Prague on Monday.
Centre-right parties have signed a power-sharing agreement to form a new government in the Czech Republic.
The coalition will be made of two political alliances that won the majority of votes in last month's parliamentary elections.
A three-party, liberal-conservative SPOLU (Together) coalition -- composed of the Civic Democratic Party, Christian Democrats, and the TOP 09 party -- led the election with a 27.8% share of the vote.
They signed an agreement on Monday with a liberal coalition made up of the Pirate Party and STAN -- a group of mayors -- which came third with 15.6% of votes.
The new partnership will hold a 108-seat majority in the 200-seat lower house of Parliament and will aim to form an 18-member government.
"We’re aware there are no easy times ahead of us," said Petr Fiala, a former university rector and the coalitions’ candidate for prime minister.
"Systematic changes await us, pushing the country forward, towards better management of taxpayers' money, and towards a country that is not drowning in bureaucracies," Fiala added.
The agreement moves a step closer to ousting the populist Prime Minister Andrej Babiš and his centrist ANO (YES) movement to the opposition. Babiš narrowly lost the election with 27.1%.
Czech President Miloš Zeman has indicated that he was willing to swear in Fiala as prime minister, although no date has yet been set.
Zeman, who is currently hospitalised, had previously said that he wanted to reappoint his ally Babiš, but the offer was refused.
The new Czech parliament also convened for the first time on Monday to elect a new speaker and other parliamentary officials.
The new government will be tasked with tackling a surge of coronavirus infections and high inflation driven by soaring energy prices.