The system is said to use depressurised tubes, as well as magnets and fans, to propel passenger pods at high speeds between the Californian cities. Musk has described the design as a cross between Concorde, a railgun and an air hockey table.
SpaceX said, in a statement on their website: "While we are not developing a commercial Hyperloop ourselves, we are interested in helping to accelerate development of a functional Hyperloop prototype."
The competition will be geared towards university students and independent engineering teams, who will be tasked with building half-scale passenger pods. SpaceX will build a one mile test track for the teams to practically test their designs.
Groups that want to join in have to do so by September 2015, with the first design weekend being held in January 2016. The final race will be held in June 2016.
