The move comes after months of negotiations between T-Mobile's controlling shareholder, Deutsche Telekom, and Japan's SoftBank, which controls Sprint.
Under the deal, Deutsche Telekom will own 42% of the combined company and control its board. Softbank will hold a 27% stake.
T-Mobile boss John Legere will lead the new firm which will take the T-Mobile name and have a market value of US $146bn.
The merger of America's third and fourth largest mobile carriers is designed to create a more competitive firm with about 130mln customers.
In a series of tweets announcing the deal, Legere said the new firm would spend US$40bn on building a 5G mobile network in the next three years.