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"The agreement is made in order to meet the expanded supply of inflators needed by Honda and is subject to definitive documentation," Autoliv said in a statement.
Since 2008, Honda and nine other manufacturers have recalled more than 10 million cars in the United States and more than 16 million worldwide for ruptured Takata (7312.T) inflators that have been connected to five deaths in Honda cars.
Takata is under pressure from U.S. lawmakers and safety regulators to expand to all 50 states a recall of driver-side airbags, but the company has said data does not support such a move and it could divert replacement parts from the most-needed areas.
Earlier on Wednesday, a Honda executive told a hearing in a U.S. House committee the company was in talks with Autoliv and Daicel about expanding production of replacement inflators needed in a national recall.
In order to meet increased demand, Autoliv will build additional inflator capacity in its existing manufacturing facilities, it said.
Deliveries were estimated to start after about six months.
Reporting by Daniel Dickson, editing by David Evans