A subcontractor is a person or business which undertakes to perform part or all of the obligations of another's contract, and a subcontract is a contract which assigns part of an existing contract to a subcontractor.

A general contractor, prime contractor or main contractor may hire subcontractors to perform specific tasks as part of an overall project to reduce costs or to mitigate project risks. In employing subcontractors, the general contractor hopes to receive the same or better service than the general contractor could have provided by itself, at lower overall risk.

The European Union has recognised the need to make provision for sub-contracting in its rules on public procurement, as arrangements for sub-contracting can support the EU's drive to involve more small and medium-sized undertakings in the provision of goods and services for the public sector.

United States public acquisition regulations contain a number of distinct definitions of "subcontract" and "subcontractor", with calls for a consolidated definition to be adopted.

Subcontracting arrangements arise in a number of contexts including construction, engineering and other fields.

In United Kingdom building industry contract law, particularly when using JCT standard form contracts, three subcontractor types are identified:

Where companies work together to plan how they will meet a client need, with a view to subcontracting some areas of service delivery to one of the partners, they may enter into a teaming agreement which defines their contribution to the client bid and the proposed subcontracting to be put in place if the bid is successful. The teaming agreement acts as an interim agreement between them, which would generally be transformed into a formal sub-contracting agreement once a contract has been signed or an order for delivery has been placed. Under US federal acquisition rules, the term "contractor team arrangements" is used to define and recognize such agreements, and also applies where partners form a partnership or joint venture to act collectively as a single contracting body. Erin Toomey has noted that a teaming agreement only applies to a specific client tender and therefore needs to be renegotiated for any further occasion when it may potentially be used.

An obligation to award a subcontract to a named subcontractor can arise, where a bidding process names a subcontractor as an intended partner and a prime contract is subsequently awarded to the contractor by the client. In a 2002 Canadian case, A. Dynasty Roofing (Windsor) Ltd. v. Marathon Construction Services (1991) Inc., the Ontario Superior Court held that when Marathon Construction Services, a general contractor in the construction industry, had bid for a contract to construct an industrial building in January 1999, it had named Dynasty and another roofing company, Smith Peat, as the subcontractors who would be employed for the roofing work. Prices had been submitted by both Dynasty and Smith Peat, both were held to be capable of doing the work, and Dynasty's prices were the lowest submitted. However, on being awarded the prime contract, Marathon agreed a lower price with Smith Peat and offered them the subcontract. The court held that Marathon were obliged to subcontract with Dynasty, and the Court of Appeal for Ontario upheld the ruling in October 2003.