The deal will see Disney acquire film and television studios, cable entertainment networks and international TV businesses, bringing popular entertainment properties including X-Men, Avatar, The Simpsons, FX Networks and National Geographic into Disney's portfolio.
21st Century Fox's television stations and Fox News channel will be spun off before the sale, however.
"The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before," said Disney's chief executive Robert Iger in a statement.
Iger, who was previously expected to step down in 2019, will now stay on through 2021.
Disney has been seen as trying to bolster its Hollywood and television positions by getting the Fox library of content to strengthen its arsenal against Netflix and other rivals.
The rise of streaming services and the so-called cord-cutting movement against cable television, together with declining advertising revenue, have contributed to a rapidly changing landscape for media companies.
Disney, which owns the ABC television network, ESPN and has major studios in Hollywood, is set to launch its own streaming services aimed at competing against Netflix and Amazon.
The deal also gives it a controlling interest in Hulu, another popular streaming service.
The news comes as another major media deal, between AT&T and Time Warner, has been challenged in an antitrust filing by the US Justice Department.
Prior to the deal going through 21st Century Fox will transfer the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company that will be spun off to its shareholders.
21st Century Fox shareholders will receive 0.2745 Disney shares for each 21st Century Fox share they hold under the deal. (AFP)