The deal represents a significant profit on the £103.5 million Mr Desmond paid for the broadcaster in 2010, although it is thought to fall short of the £700 million price tag he had put on the channel. Northern & Shell said the deal was subject to regulatory approval.
Viacom chief executive Philippe Dauman said: "The acquisition of Channel 5 accelerates Viacom's strategy in the UK, one of the world's most important and valuable media markets ."
Channel 5 was launched in 1997 and broadcasts numerous popular shows such as Neighbours and the revived Big Brother.
The broadcaster's fortunes have been transformed since tycoon Mr Desmond, who also owns the Daily Express and Daily Star newspapers, bought it four years ago.