In a statement today, the company said the combined company - which will include the Sheraton, W Hotels and Ritz-Carlton brands, will have more than 5,500 hotels, with more than one million rooms.
Under the terms of the deal, Starwood's shares are valued at $79.88 each, with investors receiving 0.92 Marriott shares and $2 in cash.
Shareholders will also receive $7.80 per share from the spinoff of SVO, Starwood's timeshare business, which will leave shareholders with $1.13bn.
The decision brings to an end a year of speculation over who will buy Starwood. Last month Hyatt was linked with the company, while Intercontinental Hotels Group (IHG) has also been named as a possible buyer.
Shares in IHG - which had been trading lower after the weekend's terrorist attacks in Paris - spiked on the news, rising to 2,487p.
Arne Sorenson, president and chief executive officer of Marriott International, said: "The driving force behind this transaction is growth. This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace.
"This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders.
"Today is the start of an incredible journey for our two companies. We expect to benefit from the best talent from both companies as we position ourselves for the future. I know we'll do great things together as The World's Favorite Travel Company."
Bruce Duncan, chairman of the board of directors of Starwood Hotels & Resorts Worldwide, added: "During our comprehensive review of strategic and financial alternatives, it was clear that our talented people, world-class brands, global leadership and spirit of innovation were much admired and key drivers of our value.
"Our board concluded that a combination with Marriott provides the greatest long-term value for our shareholders and the strongest and most certain path forward for our company.
"Starwood shareholders will benefit from ownership in one of the world's most respected companies, with vast growth potential further enhanced by cost synergies."