The company formerly known as BAA is to sell Stansted airport to the Manchester Airports group for £1.5 billion.
The deal, announced late this evening, will mean that BAA - now known as Heathrow Airport Holdings - will be responsible for just four UK airports compared with its original seven.
The remaining ones are Heathrow, Southampton, Aberdeen and Glasgow.
BAA's airport ownership was brought into question when the Office of Fair Trading referred the company's holding to the Competition Commission (CC).
After a long inquiry the CC ruled that BAA's airport ownership was uncompetitive.
Criticising the company's performance, the commission said that BAA must sell Gatwick and Stansted and one of either Edinburgh or Glasgow airports.
Gatwick had already been sold by the time of the ruling and since then BAA has sold Edinburgh.
It held out for some time before finally accepting the ruling on Stansted - mounting a succession of ultimately unsuccessful legal challenges.
Heathrow chief executive Colin Matthews said: "Stansted airport and its people have been part of our company for a long time.
"It has been named by passengers as 'the world's best airport for low-cost airlines' for two consecutive years at the Skytrax World Airport Awards, and we are proud of its achievements."
He went on: "We wish the new owners every success and are confident the airport will continue to flourish. We will continue to focus on improving Heathrow, Glasgow, Aberdeen and Southampton airports."
The sale is expected to close by the end of February 2013.
Manchester Airports Group (MAG) owns and operates Manchester, East Midlands and Bournemouth airports.
MAG also includes the commercial property company, MAG Developments, which has a £350 million portfolio across the three airports and is leading the £650 million Enterprise Zone development, Airport City, at Manchester.
MAG also runs businesses in car parking, airport security, firefighting, engineering, advertising and motor transport.
The group's three airports and property business contribute around £3.2 billion to the UK.
MAG had been one of the bidders for Gatwick when BAA put it up for sale while the CC inquiry was going on but it lost out to American private equity group Global Infrastructure Partners which now also runs Edinburgh.Suggest a correction