Cineworld's acquisition of Picturehouse will add 21 cinemas and 60 screens to the 80-strong group, including the Cameo in Edinburgh, Picturehouse in Stratford, east London, and the Phoenix in Oxford - the chain's founding cinema, bought in 1989.
Lyn Goleby, co-founder and managing director of Picturehouse, is set to pick up a hefty sum from the deal, as she was one of the company's major shareholders.
The Arts Alliance and investment firm Albion Venture Capital also held significant stakes in Picturehouse.
Cineworld said the deal will allow it to tap into "new audiences in a high value and growing part of the market".
It will also buy Picturehouse's theatrical distribution arm, Picturehouse Entertainment, which has a number of releases under its belt since launching in December 2010.
Picturehouse, which has 750 staff, will continue to be run as a separate business within Cineworld and its existing management team will remain in place, according to Cineworld.
The art-house chain was founded to challenge the multiplex cinema model and show the independent, art-house and foreign language films that often do not make it on to the big screen.
Ms Goleby said it would stay true to its roots after the takeover: "We are known for our high quality city centre cinemas and our distinctive, wide-ranging programming.
"The unique character of Picturehouse cinemas will remain and our team will continue to bring the widest range of film to customers."
Picturehouse opens its 21st cinema today, The Duke's at Komedia in Brighton, and hopes the Cineworld acquisition will allow it to launch another 10 sites that are in the pipeline.
Ms Goleby and co-founder Tony Jones started the group when it bought the Phoenix in Oxford and has since expanded through acquiring and building cinemas, particularly in London and university cities such as Edinburgh, Cambridge, Brighton and York.
Mr Jones, who held a minority stake in the group, is now retiring, but will remain involved with the Cambridge Film Festival, which is screened at the Arts Picturehouse in Cambridge.
Cineworld is launching a cash-call to investors to raise around £16 million to help fund the Picturehouse takeover and said Ms Goleby will put £1 million into the share placing.