Best Buy operates 1,314 stores in the US, Canada and China, while Carphone Warehouse has 2,000 stores across the UK and eight other European countries under its eponymous brand and Phone House, as well as 400 in the US.
As part of the £1.1m deal, Best Buy will buy 50% of Carphone Warehouse's retail business, comprising all 2,400 stores, the web and direct businesses, the insurance operations and the airtime reselling business.
The joint venture will be housed in a new company, led by Carphone Warehouse's chief financial officer Roger Taylor.
Carphone Warehouse will retain 100% of its fixed-line telecoms business in the UK, consisting of Talk Talk, AOL Broadband and Opal, and its share of the Virgin Mobile France joint venture.
It said it would use the £1.1bn cash proceeds from the deal to repay debt and continue to grow its fixed line customer base, both organically and through acquisition.
One current target is Tiscali, the UK's fourth-largest broadband operator, which is currently being auctioned off by its Italian parent. A report today from Italian newspaper Corriere della Sera claims eight companies have made offers, listing BSkyB, BT, Carphone Warehouse, the Virgin Group, Vodafone and Italian companies Fastweb, Telecom Italia and Wind.
Charles Dunstone, chief executive of Carphone Warehouse, said: "Today's announcement marks the next big step in the Carphone Warehouse's growth story. We have been working closely with Best Buy for nearly two years and it is clear that we have very complementary cultures, skills and assets -- it's a perfect match."
The two companies already had two joint ventures; one involves Carphone Warehouse opening shops within Best Buy's US stores and the other Carphone launching Geek Squad, a technology support service developed by Best Buy, in the UK.
Best Buy acquired a 3% stake in Carphone Warehouse in 2007, opening its first store in China in the same year.