Sidewalk Labs, owned by Google's parent company, Alphabet, is to build a digital city in Toronto.
It is likely to feature fast wi-fi availability, millions of sensors, sustainable energy and autonomous cars.
Technology companies are touting their hardware and software to cities, as urban planners tackle issues such as congestion, pollution and overcrowding.
Public-private partnerships such as the one in Toronto could bring benefits, but cities needed to be sure about what they were getting out of the deal, said Robert Puentes, an urban planning expert from US think tank the Eno Centre for Transportation.
"Cities are trying everything they can to boost their economies and build infrastructure, but they have to realise that companies are not doing it for altruistic reasons - they are interested in generating profit for their shareholders," he said.
"Cities need a clear vision of what they want to achieve, and they shouldn't expect the private sector to do the job for them."
The project in Quayside, which will be known as Sidewalk Toronto, was welcomed by Canada's Prime Minister, Justin Trudeau.
"This will create a test bed for new technologies in Quayside," Mr Trudeau said..
"Technologies that will help us build smarter, greener, more inclusive cities - which we hope to see scale across Toronto's eastern waterfront and eventually in other parts of Canada and around the world."