The Commission said that it will invest an initial €450 million in the partnership and expects organisations including national, regional and local government bodies, research centres and academia to invest three times as much.
The partnership will bring companies together for research into cybersecurity solutions for different sectors including energy, health, transport and finance, the Commission said.
The recently established European Cyber Security Organisation will work with investors to determine where the funding should go, it said.
The Commission will encourage EU countries to make use of cooperation mechanisms which will be established under the new Network and Information Security (NIS) Directive, which is expected to be adopted by the European Parliament this week.
Under the Directive a network of computer security incident response teams will be created across the EU with the aim of responding more speedily to cyber threats and incidents. It will also establish a ‘cooperation group’ between EU countries to support and facilitate strategic cooperation as well as the exchange of information, and to develop trust and confidence, the Commission said.
The Commission is also considering a framework for certification of security products, with a "voluntary and light weight labelling scheme" for ICT products, it said.
According to a recent survey by management consultants PwC at least 80% of European companies have experienced at least one cybersecurity incident over the last year and the number of security incidents across all industries worldwide rose by 38% in 2015, the Commission said.
"This damages European companies, whether they are big or small, and threatens to undermine trust in the digital economy," it said.
Ian Birdsey of Pinsent Masons, the law firm behind Out-Law.com, said: "Investment in cybersecurity is an essential step towards dealing with the ever-increasing cyber threat landscape."
"Cybersecurity incidents are not restricted by jurisdictional borders, so the use of cooperation mechanisms including the creation of a network of computer security incident response teams should assist companies dealing with multi-territory incidents," he said.
"The exchange of information is also to be welcomed in principle, particularly in relation to the cyber insurance market, however there remain some practical and operational challenges to overcome," Birdsey said.