The LSE said it would fund the deal from existing resources and said it would enable it to further expand into indices, data and analytics and create new opportunities for LSE's listed derivatives trading business.
The deal is expected to close by the first quarter of 2012.
In 2010, FTSE reported total revenues of almost 100 million pounds and total core earnings of £40m. At 31 December 2010, it had gross assets of 100.8 million pounds.
The announcement follows the sale by Pearson last year of its stake in Interactive Data and marks its move away from companies that are primarily providers of data. Pearson also owns the Financial Times, Penguin books and a large education unit.
"For Pearson, the transaction further strengthens our financial position at a time of significant macroeconomic turbulence," Chief Executive Marjorie Scardino said.
"We are freeing up capital for continued investment in a proven strategy: becoming more digital, more international and more service-oriented in education, business information and consumer publishing."
For the LSE, the deal will increase its access to buy-side firms and services and will increase its global footprint, in key emerging and growth markets.
"Fully aligning FTSE with one of the world's most liquid and most international trading groups is an exciting opportunity," LSE chief executive Xavier Rolet said. "Immediately earnings enhancing, we expect this transaction to create long-term value and growth for our customers and shareholders."