Amazon announced today that it will be launching a Kindle initiative later this year that will let users borrow Kindle books from libraries – 11,000 of them in the U.S.

The project will even let users check out Kindle books, and save annotations and bookmarks, which will be preserved if the book is checked out again in the future. Pretty cool.

The company has partnered with OverDrive, a library digital content solutions provider on the initiative. “We hear librarians and patrons rave about Kindle, so we are thrilled that we can be part of bringing library books to the unparalleled experience of reading on Kindle,” said OverDrive CEO Steve Potash.

“We’re excited that millions of Kindle customers will be able to borrow Kindle books from their local libraries,” said Jay Marine, Director, Amazon Kindle. “Customers tell us they love Kindle for its Pearl e-ink display that is easy to read even in bright sunlight, up to a month of battery life, and Whispersync technology that synchronizes notes, highlights and last page read between their Kindle and free Kindle apps.”

“We’re doing a little something extra here,” Marine continued. “Normally, making margin notes in library books is a big no-no. But we’re extending our Whispersync technology so that you can highlight and add margin notes to Kindle books you check out from your local library. Your notes will not show up when the next patron checks out the book. But if you check out the book again, or subsequently buy it, your notes will be there just as you left them, perfectly Whispersynced.”

It will be interesting to see how this move affects Kindle book sales. You could always make the case that libraries and book sales have always co-existed nicely, but many book lovers love their hard copies.

Last month, Amazon shut down API access to Lendle, a program that lets Kindle users lend books from their libraries to friends. Shortly after, Amazon restored the access.

Amazon’s new library lending program will be available for all Kindle versions, including all the mobile apps.