The MOD says navy, RAF and army flying training "will be completely transformed", thanks to the contract with Ascent, a joint venture of Lockheed Martin and VT Group.
The initial contract is for £635m, but this could rise to an estimated £6bn over the 25-year life of the programme.
Minister for defence equipment and support Baroness Taylor, said, "The partnering contract with Ascent brings together MoD and industry skills to deliver a first class flying training capability.
"It will significantly improve training for Royal Navy, Royal Air Force and army aircrew by bringing together the current range of fragmented training schemes into one modern and cohesive programme."
Ascent will work with the MoD to deliver the UK Military Flight Training System, designing, delivering and managing flying training across multiple locations in the UK.
The UKMFTS programme will cover training for jet pilots and weapons systems operators, through to helicopter and multi-engine pilots to rear crew personnel.
It will encompass all flying training for students following selection, up to the point when they are ready to fly operational aircraft such as the Typhoon, Chinook and C17.