Disney said in a statement that the "shop-in-shop" would feature an array of more than 450 items from the company, including more than 100 products previously only available at its locations.
Disney stores will launch inside Target in major cities such as Philadelphia, Denver and Chicago. The company has stand-alone stores, but has closed its locations in West Virginia and Florida this year.
Target, in a separate announcement on Sunday, said it would open a store at Flamingo Crossings Town Center in Florida at the western entrance of the Walt Disney World Resort in 2021.
"We believe the combination of Disney's unmatched entertainment and storytelling with our omni-channel retail platform will create inspiring and unique experiences for our guests," Brian Cornell, chairman and chief executive officer at Target, said in a statement.
"This collaboration reflects the strength of our platforms and assets to create value for guests and growth for both companies beyond the traditional retail model," he added.
Guests can browse and purchase Disney store specialty merchandise from Disney, Pixar, Marvel and Star Wars, at select Target locations, the Target statement said.
The Disney store at Target will operated by the latter, with the "shop-in-shop" layout having an average of 750 square feet, located inside Target stores adjacent to children's clothing and toys.
The Target announcement came after the company beat expectations for earnings and raised its full-year outlook, as its investments in same-day delivery and pickup services increased traffic to its website and stores.
Led since 2014 by retail-industry veteran Cornell, Target has bounced back from a slide three years ago that saw its margins drop, prompting a rethink that has seen it remodel hundreds of stores each year.
Disney reported a steeper earnings decline than Wall Street expected, as the company poured money into its ambitious plunge into streaming media and began folding in assets purchased from Twenty-First Century Fox.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Peter Cooney)