The new agreement represents a remarkable about-face for the two companies, which have been locked in a legal struggle over alleged music piracy connected to Baidu's music file search services.
Baidu will now add a new 'EMI Music Zone' to its music and MP3 search pages, allowing visitors to listen to any track from any of EMI's Chinese language artists free of charge.
This catalogue includes popular performers from China, Taiwan, Hong Kong and Singapore.
Listeners will be "exposed to internet advertising", but the announcement did not explain what form these adverts will take.
Baidu signed a deal with MTV Networks in October to distribute MTV programming online in China. Some of this MTV content is provided free of charge, supported by advertising on the site and inserted into programmes.
"The co-operation between Baidu and EMI also moves us towards jointly controlling digital piracy, something that is important to EMI in the Chinese digital music market," said Norman Cheng, chairman of EMI Music Asia.
The music will be streamed and played on demand, and users will not be able to download music tracks to their PCs.
While this provides a degree of protection against illegal copying, various simple techniques exist that can make copies of streamed audio and video.
According to some local press reports, EMI will now drop out of a joint record company suit against Baidu.
The ongoing legal action faults Baidu for its popular music search site which links to unlicensed MP3s and other music files. The action suffered a setback in November when a local court in China rejected the claims.
The International Federation of the Phonographic Industry, which represents music labels including EMI, stated that it would appeal against this decision.
"We believe that this partnership with EMI will drive value for Baidu users, content providers and advertisers. It also sets the stage for future co-operation between the internet and music industries," said Baidu co-founder and chief executive Robin Li.
Cheng added: "Our co-operation with the largest Chinese search engine is also part of EMI's strategic roadmap to expand digital music development across the region."
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