Canadas Bombardier has signed a memorandum of understanding (MoU) with Egyptian Company for Metro Management and Operation (ECMMO) for the financing and construction of Cairo Metro Line 6.
If finalised, the contract is estimated to cost up to $4bn, according to state news agency Mena.
Egypt Transport Minister Hesham Arafat said the new line is expected to reduce pressure on the existing Line 1.
Line 6 will extend 20 kilometres from northern Cairo near the ring road and head south passing through Shubra el-Kheima and New Maadi, and terminate at the start of the Ain el-Sokhna Road.
Line 6 will intersect with Line 1 at Ghamra station and Line 4 at Fustat station.
This phase of the metro will have 24 stations, including 12 that will be built underground.
No timeline has been given for the construction of the new line.
In April 2016, NAT awarded a consortium led by French firm Vinci Construction Grand Projects and the local subsidiary of Bouygues Construction with the $1.2bn civil work for the third phase of Cairo Metro Line 3.
A Japanese contractor is expected to submit an offer for the civil work packages of the first phase of Line 4.
In June, Bombardier signed a MoU with New Urban Communities Authority (Nuca) to study the establishment of a monorail from Nasr City to New Cairo and the new administrative capital.
The Canadian firm leads one of two groups vying for a contract to build another planned monorail scheme in Greater Cairo.