Volvo spokesman Per-Ake Froberg confirmed that the agreement was signed between the two automakers in Goteborg.
He could not disclose the value of the deal, saying details on the price tag and the financing of the agreement would be disclosed at a news conference later Sunday. Analysts have estimated the deal at about $2 billion.
Ford has been trying to sell Volvo since late 2008 to focus its resources on managing its core Ford, Lincoln and Mercury brands.
Geely, an independent automaker that has struggled to upgrade its image in overseas markets, has long coveted a stronger foothold in Europe.
Volvo employs nearly 20,000 workers.
