The company is giving about 42.5 million yen ($375,000) to the Cartivator project.
The company is giving about 42.5 million yen ($375,000) to the Cartivator project, which is developing the three-wheeled sci-fi car that relies on drone technology to take flight.
The manned vehicle, dubbed SkyDrive, will have four sets of propellors and -- at 2.9 metres (9.5 foot) long and 1.3 metres wide -- is aiming to be the world's smallest flying car, according to the project.
A promotional video graphic shows the little car lowering its retractable wings before zipping off for a flight around Tokyo and then lighting the flame at the Olympic stadium.
The car is expected to have a top flight speed of around 100 kilometres (62 miles) an hour, hovering some 10 metres off the ground. It will have a top land speed around 150 kilometres an hour.
A group of young engineers from the auto and aerospace industries are working on the project, which is being funded by a number of investors including Toyota subsidiaries.
The group is hoping to launch a manned prototype by the end of next year so it can be used to light the Olympic flame when Japan's capital hosts the Games.
Other firms, including ride-sharing service Uber and a Silicon Valley startup reportedly backed by Google co-founder Larry Page, are moving to put in place a system of flying cars to move people around cities.