Team GB's performance director Dave Brailsford approached Halfords last year with the chance to sponsor an all-British team in the run up to the Beijing Olympics.
The team consists of twelve riders, including Nicole Cooke and Rob Hayles.
Halfords' trading director Paul McClenaghan said the support for the team was "long-term." Brailsford wouldn't divulge the team's annual budget but said that star rider Cooke was getting paid the same wage as when she was riding for Continental teams.
"She's worth the money," said Brailsford.
At a team launch event held today beside the sloth enclosure at London Zoo, Cooke said the team was "the biggest step forward in women's sport in this country for many, many years."
Cooke is one of Britain's brightest hopes for Olympic Gold in Beijing this summer. Brailsford said the GB Cycling team - which meshes with the Halfords-Bikehut team, sharing staff and riders - has 13 good medal chances.
In the 1980s Halfords co-sponsored the international ANC-Halfords team.
The Halfords-Bikehut team rides bikes from Boardman Bikes, a brand that launched in Halfords last summer. An elite range of Boardman bikes - including a time trial frame, seat pillar and forks for £2000+ - will be launched soon but the team is currently riding on off-the-shelf bikes available in Halfords stores today. The elite range will be available to bike shops: the aim is to appoint 20+ IBDs across the UK, said Chris Boardman.
Cooke recently returned from a recce of the Beijing road course. She rode the course on a Boardman bike and said this was an ideal preperation.
"Going to Beijing and being able to ride the bike I'll be on at the Olympics was very important. Instead of just visualising what the race might be like I could get the sensation of it.
"Also, to have a British sponsor involved is a very big bonus," said Cooke.
Dave Brailsford stays as performance director of British Cycling as he becomes the general manager of Team Halfords Bikehut.
He said: "Being able to work with a British company on a project such as this in the run up to the Beijing Olympic Games presents not only the perfect performance environment for Nicole Cooke and her team mates but is also a fantastic commercial opportunity for British Cycling to work with a company whose heritage in the sport and accessibility in the British market will enable us to grow what we hope will be a successful and productive partnership in years to come."
Halfords chief executive Ian McLeod said: "This is a brilliant opportunity to support our key athletes in their preparation for the Beijing Olympics and to field a world-class all-British team riding on the international circuit. The partnership with British Cycling is also key in reinforcing Halfords' reputation as a credible retailer for enthusiast cyclists.
"We have been working with Chris Boardman over the last three years to develop his range of bikes, bringing them to the market in 2007. The fact that they have been chosen by the team is the highest accolade for the quality of the product."