The low-cost Changhong H5018, to be built by Foxconn, will be powered by Baidu's own Cloud OS.
With a price tag of less than $158 it will face fierce competition in the low-end smartphone market, analysts said, as Baidu attempts to create a significant presence in China's booming mobile arena boasting the largest number of smartphone users in the world.
Low-cost smartphones by companies such as Huawei Technologies, ZTE Corp, HTC, Lenovo and Xiaomi are competing in that market, but Baidu's director of international communications said he felt the H5018 would do well.
"It's a terrific market opportunity for us, and Baidu is constantly adjusting, understanding what users are interested in," Kaiser Kuo told BBC News.
The phone will be offered with 100GB of cloud storage on Wangpan, the Chinese equivalent of Dropbox or Google Drive.
"The new handset is integrated with the cloud -- and with our 100GB offering, I think that no one will be able to match that," Kuo said.