Local World, led by ex-Mirror Group chief executive David Montgomery, intends to establish a major presence in the sector and is also taking on titles from Yattendon Group subsidiary Iliffe News and Media.
The new business will have more than 100 print publications such as Cambridge Evening News, Leicester Mercury and Hull Daily Mail plus 60 websites across England and Wales.
DMGT is taking a 38.7% shareholding in Local World while the Iliffe family are receiving a 21.3% stake.
Daily Record owner Trinity Mirror is paying £14.2m to take a 20% holding in Local World but is not putting any of its publications into the venture.
Trinity said Local World would have had revenue of £273m and operating profit of £21m in the 12 months to September 30, 2011, and predicted the stake would add to earnings.
The rest of the Local World shares are being divided up between investment fund Artefact Group, which has links to Tory peer Lord Ashcroft, and Odey Asset Management.
Mr Montgomery is Local World's chairman. Northcliffe chief executive Steve Auckland and chief financial officer Rachel Addison take the same roles in the new group.
Local World is promising to invest £10m to expand the digital operations of the company and aiming to increase online advertising revenue from 11.4% of the total income to 20%.
Mr Montgomery said: "This is an entirely new type of media business. The value of Local World will lie in its people, its franchises and its [intellectual property].
"It will be unencumbered by the infrastructure of the industrial past such as property, printing presses and large-scale distribution or any legacy issues such as high levels of debt."