Nike has supplied England for the past 29 years and the only major national rugby team that it now makes kit for is France.
The move confirms Canterbury, which is owned by the retail chain JD Sports, as the biggest supplier of rugby kit to national teams. It already makes shirts for Scotland, South Africa, USA and Japan.
It is understood that Canterbury will pay at least £5m a year for the next four years, and it will supply kit until after the end of the 2015 Rugby World Cup, which is being held in England. It is understood Nike fought to keep the contract but were outbid by Canterbury.
Sophie Goldschmidt, chief commercial officer at the Rugby Football Union, said there had been in-depth discussions before the decision was made to go with Canterbury. "It ended very amicably, " she said.
England is recovering from a disastrous World Cup last year, and its performance during this year's Six Nations has been mixed.
Chris Stephenson, the chief executive of Canterbury, said he was confident that he had timed the deal well. "I genuinely think they are playing more as a team. And the opportunity to grow a bunch of young guys into a formidable team is one of the main reasons why we thought it would be a great deal for us."
He added that even when England were not performing well, they were always being talked about. "It's great for brand awareness."
Nike, in conjunction with England's coach Clive Woodward, were instrumental in developing the modern tight-fitting rugby jerseys. However, the RFU has been criticised in recent years for frequent kit changes and the use of non-England colours. The all-black kit was particularly controversial during last year's World Cup in New Zealand, and England received a warning from organisers after some shirt numbers peeled off during the opening game against Argentina.
Canterbury was founded in New Zealand more than 100 years ago, but it fell into administration in 2009. JD bought the brand as well as the Stockport distribution centre in 2009 for £6.5m.
JD also owns The Duffer of St George and Kooga Rugby brands.
Mr Stephenson said that the turnover of Canterbury, which is nearly £50m a year, would be boosted to the tune of £30m to £40m over the course of the four-year contract. "It reflects how keen we are to grow the awareness of rugby."