The southern town is to deploy 100 driverless pods in 2017, similar to a system already used at Heathrow airport.
Each pod will carry two passengers along their own pavement and travel at 12mph powered by electric motors in each wheel.
Customers can hail one in the street or use a smartphone app to book. Each trip will cost £2 and will link Milton Keynes central train station to the town's shopping centre.
John Bint, Milton Keynes Council’s cabinet member for transport and highways, said:"It’s a great initiative and we are being as supportive as we can be at the moment to overcome a number of regulating hurdles.
"That is mainly the fact that it’s not a car, it’s not a taxi so we need to work out how it’s going to be permitted."
Despite not driving themselves, passengers could still be liable for what happens in the vehicle meaning it may not be legal to use one when drunk.
The pods will use GPS trackers, ultrasonic sensors and hi-def cameras to avoid obstacles.
Each one will have a joystick so they can be taken over in an emergency.
Ultra Global is the company behind the technology. A trial is due to start in 2015 with the full system intended for roll out in 2017.