The move will place DC Interact under the same roof as Meme, Engine's digital arm. A source close to the deal said that while Engine had no immediate plans to amalgamate the company into any of its existing businesses, it hadn't ruled out a future merger.
The Engine Group chief executive, Peter Scott, is understood to have led the bid for the company. Under the terms of the sale, DC Interact's 28 staff will move into Engine's Golden Square headquarters.
DC Interact was founded in 1998 and offers services including web design and digital strategy. Its management will continue to run the business.
The agency's clients include Channel 4 and Tesco Personal Finance. In its most recent accounts, it posted a post-tax loss of £539,554 on turnover of £2.5 million for the year ending 31 January 2006.
The Engine Group and DC Interact refused to comment.