This paper proposes a cooperative guidance strategy for three-body engagement scenario. Such situations arise when an interceptor is launched to intercept a moving target, such as an aircraft, and the target actively protect itself by launching a defending interceptor. The guidance strategy is designed for three-dimensional engagements using a finite-horizon optimal control formulation with the terminal constraints. The proposed formulation allows us to impose terminal constraints on the desired intercept angles, in addition to minimizing the control effort of target-defender team, which shapes the trajectories of adversaries accordingly. The guidance algorithm is derived using calculus of variation and static optimization techniques to generate the lateral accelerations of both target and defending interceptor. Numerical simulations have been presented for various engagement scenarios to vindicate the efficacy of proposed guidance algorithm.