The alliance comes as workers and governments are fretting over the potential repercussions of AI on work, with fears that whole industries and professions could be displaced by human-replacing technology.
Microsoft has become the standard-bearer of the AI revolution, moving faster than other tech giants in adopting the technology, most notably through its partnership with OpenAI, the creator of ChatGPT.
"Workers are on the front lines of using and delivering and harnessing the power of technology every single day and we learn how it works and we learn how it doesn't work." said Liz Shuler, head of the AFL-CIO, at an event in Washington.
"So why wouldn't you want people who actually do the job involved" preparing for its consequences, she added.
The AFL-CIO comprises 60 labor unions representing 12.5 million workers in the US.
Under the project's terms, Microsoft will train labor leaders and workers on how artificial intelligence works, as well as begin a process of making it easier for Microsoft staff to unionize.
The alliance will also see Microsoft and the union group team up on trying to shape public policy.
"By working directly with labor leaders, we can help ensure that AI serves the country's workers," said Brad Smith, vice chair and president of Microsoft, who called the alliance "historic."
With the plan, Microsoft differentiates itself from other tech giants that haven't shied from a more confrontational approach towards organized labor.
Amazon employees in New York voted to form a union in April 2022, even though the e-commerce giant tried actively to dissuade them, filing numerous legal appeals to halt the process.
There are no unions at Meta, Google or Tesla, and only a handful of union members at Microsoft and Apple.
Union leader Shuler urged companies to follow Microsoft's example.
"Yes, we can stand toe to toe with any company in this country at the negotiating table and demand what is ours," she said.
"But for those who are willing to negotiate with us in good faith, and treat us like real partners on these critical issues, there's an open invitation for discussion," she added.
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