BBC
Sony has agreed to buy 50% of the firm for 1.1bn euros ($1.5bn; £964m), making the mobile handset business a wholly-owned subsidiary of Sony.
Ericsson said that the "synergies" between telecoms equipment and mobile phones were decreasing.
The transaction also includes a patent deal.
Sony will get the five sets of patents that are essential to making the phones and a licensing agreement on any other intellectual property.
Many observers expected this deal because Sony wanted to integrate its phone division with its mobile games machine and tablet computer units.
"This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want," said Sony's chairman Sir Howard Stringer.
Earlier this month, Sony Ericsson broke even in its third quarter and announced it would focus on smartphones from 2012.
The company said its Xperia smartphones accounted for 80% of its sales. The handsets run Google's Android operating system.
Analysts said Sony had proved resistant to sharing its brands and other assets with the joint venture, explaining why it took until this year for PlayStation games to be offered on any of its handsets.
The new Sony subsidiary will only make smartphones from next year
Japanese technology giant Sony has bought full control of mobile phone maker Sony Ericsson from Swedish telecoms equipment maker Ericsson.
Ericsson said that the "synergies" between telecoms equipment and mobile phones were decreasing.
The transaction also includes a patent deal.
Sony will get the five sets of patents that are essential to making the phones and a licensing agreement on any other intellectual property.
Many observers expected this deal because Sony wanted to integrate its phone division with its mobile games machine and tablet computer units.
"This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want," said Sony's chairman Sir Howard Stringer.
Earlier this month, Sony Ericsson broke even in its third quarter and announced it would focus on smartphones from 2012.
The company said its Xperia smartphones accounted for 80% of its sales. The handsets run Google's Android operating system.
Analysts said Sony had proved resistant to sharing its brands and other assets with the joint venture, explaining why it took until this year for PlayStation games to be offered on any of its handsets.
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