The six hectare Gloucestershire site offers an opportunity to build approximately 2,100 new homes.
Vinci St Modwen will work closely with the DIO to fund, manage and lead the development on the surplus land in return for a share of the net proceeds.
MoD Ashchurch is an army transport depot near Tewkesbury.
DIO development manager Mark Hirst said: “Our purpose is ensure the right buildings are in the right place to support our Armed Forces and that the military estate is no larger than required to meet defence needs.
“By redeveloping land which is no longer required by the Ministry of Defence we not only realise value for money for the taxpayer, but also provide space for homes and businesses which benefit communities.”
St Modwen residential land director Ben Cook said: "MoD Ashchurch complements St Modwen’s expertise in regeneration and our ability to think long-term and innovatively to extract the best value from large-scale sites with previous uses. We are looking forward to working closely in partnership with the Defence Infrastructure Organisation and transforming this 200-acre site from its present use into a greener, sustainable, mixed-use community that will bring benefits to both the local and broader Gloucestershire economy and leave a positive legacy for the area and future generations to enjoy.”