Delta Air Lines has agreed a deal to buy Singapore Airlines' 49% stake in Virgin Atlantic for $360m (£224m).
Virgin Group and Sir Richard Branson will retain their 51% shareholding, and the Virgin brand will remain in place, the new partners said in a joint statement.
The deal is subject to regulatory approval in the US and Europe.
Investors in Delta shrugged off any concerns over that and closed up 5.1% in New York trading.
It follows a spat between Sir Richard and Willie Walsh, boss of BA-owner International Airlines Group, over the future of Virgin Atlantic.
Earlier, Mr Walsh offered to wager a "knee in the groin" in a bet with Sir Richard over whether the Virgin brand would still be around in five years.
He was responding to a £1m bet offered by Sir Richard on Monday.
Virgin and Delta said the deal would allow allow them to "overcome slot constraints" and offer more flights from Heathrow.
The carriers will operate 31 peak-day round trips between the UK and North America.
"Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the UK, particularly on the New York-London route," said Delta boss Richard Anderson.
Sir Richard said it was an "exciting day" in Virgin's history.
"It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business."
Singapore Airlines says it is selling its stake, which it has owned since 1999, because of increased competition in its local market, where it wants to keep its focus.
Loizos Heracleous, professor of strategy and organisation at Warwick Business School, said the airline had always faced this issue and that the move really reflected Singapore Airline's disappointment with its investment.
"Singapore Airlines has made it known years ago that it was considering options with respect to its Virgin stake. Virgin Atlantic has not been very profitable, posting a loss for the most recent financial year and slim returns in the years where it did make profits.
Singapore Airlines has itself launched a low-cost carrier, Scoot, and has been putting money into its regional service, SilkAir.