The Leeds-based firm, WhizzGo, has been awarded the contract to run the project to cut congestion in York by giving motorists the chance to use a network of pool cars kept at sites across the city, rather than having their own vehicles.
WhizzGo already runs a car club in Leeds.
The York project is due to be launched by the autumn and it will give motorists the chance to rent a car on an hourly rate for as little as £3.95.
The cars will be parked in specially designated on-street bays across the city and the hire cost includes tax, insurance and enough petrol to make short journeys.
WhizzGo is leading a national expansion of car clubs, with another operation running in Brighton and Hove and launches also planned in Liverpool and Southampton in July.
Damon Copperthwaite, York Council's acting assistant director of city development and transport, said: "The council is pleased to be working with WhizzGo and that there has been so much interest in the car club from residents and businesses around the city.
"Car clubs fit very well into the council's transport plans, which encourage the use of public transport and a reduction in the over-dependence on the private car."
While York's traffic level has remained the same as in 1999, congestion could rise as a series of major housing developments are planned. A planning inquiry is being held into two schemes at Germany Beck and Derwenthorpe which could see a total of more than 1,200 homes built in the city.
The Yorkshire Post revealed earlier this month that the city council had been approached by car club charity Carplus to help run a national environmental project which will look to identify trends of driving in York.
These trends will be monitored before and after car clubs have been introduced in York and other participating towns and cities to show the effects the schemes can have on transport policies.
WhizzGo's managing director Charlotte Morton said: "As a Leeds-based company we're delighted to be working with another city council on our doorstep. We expect one WhizzGo car will typically replace six private vehicles.
"This should have a real impact on the amount of congestion and pollution in the city centre."
According to WhizzGo, to run a car equivalent to the ones used by the company would cost £2,500 a year in depreciation, insurance and tax.
The firm is also developing links with train operators to make it easier for people to travel between cities by rail and use a WhizzGo car once they reach their destination.