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The electronics maker will supply Dell with CRT and flat-panel monitors, as well as storage devices, connectivity products and other components.
Dell, the world's largest PC maker, will also sell a range of Philips-brand computer peripherals, along with related products.
In return, Philips has named Dell as its preferred supplier of servers, workstations, PCs and data storage products.
Philips said the five-year agreement could be worth up to $5bn based upon 25% year-on-year growth. No other financial details of the deal were disclosed.
Philips and Dell, also plan to work together on technology planning and marketing as well as optical storage standards, in which Philips is a worldwide leader.
Expansion of the alliance is possible, Philips said.