The gift by Michael Moritz, a billionaire who made his fortune at Sequoia Capital - which invested early in Google, Yahoo and PayPal - is the largest donation towards undergraduate financial support made in European university history.
Targeted at students from families earning under ?16,000 a year, the Moritz-Heyman Scholarships (Mr Moritz's wife is the American novelist Harriet Heyman) will provide financial support of ?11,000 a year per recipient.
Half will be awarded as a bursary, with the remaining ?5,500 used as a fee waiver on Oxford's ?9,000 tuition fee. The support will cover all living costs for undergraduates from the lowest income bracket while reducing fees to ?3,500 a year.
About 100 students will receive the scholarship in 2012-13, but Oxford hopes ultimately to extend the scheme to all its students from the lowest-income band.
Around 280 of its first-year students - one in 10 - are expected to come from that band this year, although that is a low proportion compared with most other universities.
The university already has a relatively generous undergraduate support package. From this autumn, students who have been eligible for free school meals can claim support worth ?22,400 over three years from Oxford in addition to the full non-repayable state maintenance grant.
One of the most significant aspects of Mr Moritz's donation is that it mirrors philanthropic giving in the US, where large endowments and donations allow some Ivy League institutions, such as Harvard and Yale universities, to waive tuition fees of more than $50,000 (?32,200) for poorer students.
Oxford hopes that Mr Moritz's ?75 million commitment will help secure further donations in a bid to raise a total of ?300 million for undergraduate support.
His gift will be released in three tranches, with each ?25 million contribution triggered once a further ?50 million has been raised from other donations. Oxford has also pledged to release ?75 million from its endowment fund for the project.
Mr Moritz, a Cardiff-born Oxford graduate who moved to California in the 1970s, said: "This is a fresh approach to student funding in the UK - fuelled by philanthropy, catering to the dreams and aspirations of individuals determined to excel, while also safeguarding the academic excellence on which Oxford's global reputation stands."
The venture capitalist, whose wealth is estimated at $1.8 billion by Forbes, announced in May that he was stepping down from Sequoia's day-to-day management because he had been diagnosed with a rare, incurable disease.
Andrew Hamilton, vice-chancellor of Oxford, said the "extraordinary and exciting gift would have a transformative effect".
"This remarkable and hugely generous gift allows us to go an important stage further towards our goal of ensuring that all barriers - real or perceived - are removed from students' choices," he said.
"We hope this is a model that can be followed by other universities."