The deal, worth in excess of £500,000 and brokered by Oaks Consultancy, will see Dunlop become the Official Development Partner to ESR.
As part of the deal it will also become lead sponsor of several events including the Mini Squash Programme, Premier Squash League and the National Racketball Championships.
Dunlop, which also sponsors elite athletes such as England's World number two Nick Matthew, has a long standing association with professional squash. The firm said the deal expands these links to focus on supporting both squash and racketball at grass roots and development level.
A spokesman for ESR said that it was looking for further investment and sponsors in other areas as part of a restructuring of its sponsorship offering.
Nick Rider, chief executive of England Squash and Racketball, said: "Squash is one of the few sports where England has genuine world class talent with four men and three women ranked in the top 10 in the World.
"We want to continue this tradition which is why the partnership will help increase resources at a grass roots level to make the sport more accessible to all.
"One of our strategic aims over the next five years is to introduce 122,000 children to squash and racketball and this partnership will help us achieve that."
Barry Leach, Chief Executive of Dunlop, said: "Developing Squash and Racketball at grassroots level is of paramount importance to the sports future and Dunlop is delighted to be a part of this."