George Lucas has sold his production company Lucasfilm Ltd, and the rights to the Star Wars and Indiana Jones franchises to Disney.
The American entertainment corporation, which already owns Pixar, ESPN and Marvel, will pay around $4bn, with more Star Wars movies heading into production immediately.
Disney chief executive Bob Iger says the franchise is a 'great fit' for Disney, who intend to release "Episode 7" in 2015.
"The last Star Wars movie release was 2005's Revenge of the Sith, and we believe there's substantial pent-up demand," Iger said, perhaps not paying attention to the prequel backlash.
The deal also gives Disney the rights to the Indiana Jones movies, special effects company Industrial Light and Magic, and Skywalker Sound.
But any plans Disney have to further the Indy franchise will depend on the will of Lucas, director Steven Spielberg and star Harrison Ford.
In a statement, George Lucas insisted the time was right for him to move on. "It's now time for me to pass Star Wars on to a new generation of filmmakers. I've always believed that Star Wars could live beyond me and I thought it was important to set up the transition during my lifetime."
Lucas will be 'creative consultant' on the new movie, with Disney touting the possibility of a new trilogy, releasing a Star Wars movie every 2-3 years subsequent to Episode 7.
Kathleen Kennedy, the current co-chairman of Lucasfilm, will become its president and report to Walt Disney Studios Chairman Alan Horn.
George Lucas dealt with heavy criticism for his work on the second Star Wars trilogy, eventually conceding defeat in his quest for more Star Wars sequels in January. "Why would I make any more when everybody yells at you all the time and says what a terrible person you are?" he said in an interview with The New York Times.
"On the Internet," continued Lucas, "all those same guys that are complaining I made a change are completely changing the movie.
"I'm saying: 'Fine. But my movie, with my name on it, that says I did it, needs to be the way I want it.'"