The tie-up will create a world-leading business with annual revenues of around £6.5 billion from Glaxo products such as Aquafresh and Beechams and antiseptic range Savlon and cough and cold brand Tixylix from Novartis.
In addition, Glaxo is selling its oncology portfolio and related research and development activities to Novartis for up to 16 billion US dollars (£9.5 billion) and buying the Swiss firm's vaccines business for an initial 5.25 billion US dollars (£3.1 billion).
Separately, Novartis is to sell off its animal health division to Lilly for about 5.4 billion US dollars (£3.2 billion) and also plans to sell its flu business.
The three-part transaction involving Glaxo and Novartis is expected to complete during the first half of next year and will result in a 4 billion US dollars (£2.4 billion) return of capital to Glaxo shareholders.
Novartis employs more than 3,000 people across nine sites in the UK, including at its regional headquarters in Frimley, Surrey. Glaxo's main consumer healthcare sites are at Maidenhead, Berkshire, and Weybridge, Surrey.
Glaxo chief executive Sir Andrew Witty said: "Opportunities to build greater scale and combine high quality assets in vaccines and consumer healthcare are scarce.
"With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders."
Glaxo shares opened 5% higher following the announcement, while rival AstraZeneca was up 8% in the wake of speculation that it is in the takeover sights of US rival Pfizer.