WWE and the company that runs Ultimate Fighting Championship will combine to create a 21.4 billion US dollar (£17.3 billion) sports entertainment company.
A new publicly traded company will be formed that houses the UFC and WWE brands.
Endeavor Group Holdings will hold a 51% controlling interest in the new company once the deal is complete.
Existing WWE shareholders will hold a 49% stake in the new company.
He will also remain as Endeavor chief executive.
Vince McMahon, executive chairman at WWE, will serve in the same role at the new company.
The announcement comes after Mr McMahon, the founder and majority shareholder of WWE, returned to the company in January and said that it could be up for sale.
Rumours swirled about who would possibly be interested in buying WWE, with chatter focusing on companies such as Endeavor, Disney, Fox, Comcast, Amazon and Saudi Arabia’s Public Investment Fund.
Industry experts had viewed WWE as an attractive acquisition target given its global reach and loyal fanbase, which includes everyone from minors to seniors and a wide range of incomes.
The company is also a social media powerhouse.
It surpassed 16 billion social video views in the final quarter of last year.
Its female wrestlers comprise five out of the top 15 most followed female athletes in the world, across Facebook, Twitter and Instagram, led by Ronda Rousey with 36.1 million followers.
WWE had more than 7.5 billion digital and social media views in January and February of this year, up 15% from the same time frame a year ago.