The agreement includes DP World Tour, also known as the European PGA Tour.
"After two years of disruption and distraction, this is a historic day for the game we all know and love," PGA TOUR Commissioner Jay Monahan said in a statement.
The merger will end all pending litigation, and the two leagues will combine their commercial businesses into a new, yet-to-be-named company, according to CNBC, which adds the following:
LIV Golf is backed by the Saudi Arabia Public Investment Fund, an entity controlled by the Saudi crown prince and has been embroiled in antitrust lawsuits with the PGA Tour in the last year. The deal announced Tuesday would end all pending litigation.
PIF is prepared to invest billions of new capital into the new entity, CNBC'S David Faber reported on Tuesday. Terms of the deal weren't disclosed.
As part of the agreement, the three groups will establish "a fair and objective process for any players who want to re-apply for membership with the PGA Tour or DP World Tour" following the end of the 2023 season, according to a release.
The parties said that the agreement combines the golf-related business from Saudi Arabia's sovereign wealth fund with the commercial and business rights of the PGA Tour and European Tour into a new, collectively owned for-profit entity.
The deal comes soon after LIV golfer Brooks Koepka won the PGA Championship, one of four major titles in men's golf.