A source close to the transaction confirmed that Nanjing-based Sanpower had agreed terms on its purchase of an 89% stake in the 165-year-old retailer.
It puts paid to separate plans being considered to float House of Fraser on the London Stock Exchange this summer.
The department store, which has its origins as a small drapery store in Glasgow, was linked to the takeover by Sanpower - which has more than 100 businesses in mainland China - over the weekend.
Chairman Don McCarthy, whose family control 20% of the company, was already believed to have accepted the offer at that point.
Other large shareholders included Icelandic banks and Scottish entrepreneur Sir Tom Hunter, with more than 10%.
House of Fraser, which generates sales of £1.2 billion a year and employs 7,300 people as well as 12,000 concession staff at 61 stores, has held a protracted search for new investors in the last year.
France's Galeries Lafayette had exclusivity on talks with House of Fraser until the end of January. It is also believed to have held informal takeover talks with Sports Direct tycoon Mike Ashley.
The chain, first listed on the stock market in 1948, and remained a public company until it was bought by Mohamed al-Fayed in 1985.
It was listed again in 1994 before being snapped up in 2006 by a group of investors led by Icelandic tycoon Jon Asgeir Johannesson's Baugur Group in a £350 million deal.
Sanpower is run by tycoon Yuan Yafei, whose empire spreads across finance, property, media, transport and IT and now employs 30,000 people with assets worth nearly £5 billion.
Reports suggest the business is planning to inject £70 million to £80 million into House of Fraser in order to finance a wide-ranging store revamp and website improvements.
It may also take the department store into China by opening new stores or changing some existing sites to the House of Fraser name.
House of Fraser has yet to issue a statement confirming the deal, with a source saying final details needed to be ironed out, though photographs have been published showing bosses of both companies apparently toasting with champagne.