The aim is to reduce rush hour traffic and pollution problems.
Sheffield Council has emp-loyed Greg Challis to develop and promote a new city car club. Members will share the use of a pool of cars.
The scheme – one of the largest of its kind in the UK – is designed to cut the number of vehicles on the region's roads, reduce single occupancy car journeys and reduce the emission of harmful gases.
The club will invite both individuals and businesses to join. Each member will pay an annual fee of about £100 to cover car maintenance, tax and insurance, and then borrow cars on an hourly rate.
There are already 30 active car clubs operating in the UK with about 6,000 members. Similar initiatives have been operating out of mainland Europe since the early 1990s and research has shown one club replaces five privately owned vehicles on average.
Sheffield's club, which is being developed by Mr Challis and promoted by Leeds-based charity Carplus, will be run by a commercial operator when it is officially launched in September.
Its focus will initially be the city centre, where the council is already working to improve air quality.
The aim is to link-up with other local authorities in South Yorkshire in the future and develop a county-wide car club within three years.
"Car clubs offer a smart choice for individuals and businesses who need to make regular journeys, particularly those based in a city centre location where parking space is at a premium," said Mr Challis, who previously worked on the Sustainable Transport Project at Heeley Development Trust.
"Members can save money on running and maintenance costs, reduce the need for owning multiple vehicles and address problems associated with congestion, parking and air quality.
"Similar schemes in Switzerland, Germany and Holland, have already been very successful, and we want South Yorkshire to be at the forefront in providing sustainable travel options. The club will help people to plan their journeys and think more about their car use."
Sheffield's air quality scheme Care4Air, which encourages businesses and individuals to reduce unnecessary vehicle use, is backing the scheme.
Spokesman Mark Daly said: "The car club will help to reduce the amount of exhaust pollution and carbon dioxide released into the atmosphere, whilst giving people more options in how they travel.
"These plans are very timely as congestion and its impacts are currently of major concern to people in the city."
Sheffield has a history of pollution problems, particularly in the Tinsley area, which are blamed for causing respiratory health problems.
The council is encouraging bus operators to use cleaner vehicles as part of its clean air policy and plans to expand its park and ride scheme as part of a 15-year development plan with new sites in Dore, Hillsborough and Malin Bridge.
Coun Terry Fox, Cabinet member for transport and environment, said: "We are determined to improve air quality in Sheffield and the car club initiative is an excellent way to make a significant improvement as well as being a practical alternative for many motorists."