The two Japanese consumer electronics giants plan to develop the operating system by next March, Matsushita spokeswoman Yoko Fukusaki said.
Like computers, many high-tech electronics products require built-in software to control their complex functions.
The operating system will be used in products such as televisions, DVDs and microwave ovens, Fukusaki said. Matsushita sells products under the Panasonic, National, and other brand names.
She declined to say whether the companies were trying to challenge Microsoft's Windows operating system with the move. But the decision by two of the world's largest consumer electronics manufacturers is likely to add to competitive pressures on Microsoft.
'The joint project is designed to make products with better functions that are easier to use,' Sony spokesman Shinji Obana said.
U.S. computer giant IBM has thrown its considerable weight behind open-source software, particularly Linux, in which the underlying code is public and open for modification, unlike Microsoft's proprietary software.
Some other high-tech companies also are embracing Linux and open-source technology in their product offerings.
Matsushita and Sony said they will discuss expanding the use of their jointly developed operating system with other electronics companies that have shown interest, such as Hitachi, IBM, NEC, Philips, Samsung and Sharp.
The source code also will be made available free to the public to encourage its broader use throughout the industry, they added.
'This co-development program can further promote technological advancement and wider application of Linux through free exchange of ideas within the open source community,' they said.
Earlier this month, Japan's public management ministry said it would earmark 50 million yen ($413,000) for a panel of scholars and computer experts to study the possibility of using open-source software such as Linux.
The study, aimed at catching up with nations that are switching to computer systems other than Windows, is to finish by March 2004.