The pop duo shared a stage during a TV special on the younger singer's hits as she recorded an MTV Unplugged programme in the US.
Miley, the 21-year-old famed for her suggestive routines and twerking, played two songs with Madonna, 55, for the stripped-down session filmed in Hollywood.
They are said to have grinded and grabbed each other during their duet on Miley's We Can't Stop and Madonna's Don't Tell Me in the hour-long acoustic show.
Performing alongside Madonna has become something of a rite of passage or seal of approval for young female pop superstars, following shows in which she has collaborated with the likes of Britney Spears, Christina Aguilera and MIA.
Miley's show featured a number of songs from her latest album Bangerz, including Wrecking Ball, which featured a controversial video in which she appeared naked.
The performance is being screened in the US tonight (January 29) and will be broadcast in the UK at a later date.
From Associated Press Via Yahoo! News