The move comes as investors have pushing the New York company to boost the company's stock price, which has dropped by more than 40 percent since 2006.
McGraw-Hill, which owns Standard & Poor's credit ratings, also will accelerate share buybacks to a total of $1 billion for 2011. It has bought back about half that amount to date.
McGraw-Hill Education will be the new company focused on education services and digital learning, while McGraw-Hill Markets will retain S&P and J.D. Power and Associates, a market research company.
Terry McGraw, chairman, president and CEO of the company, will lead the Markets business. A search has begun for a leader of the Education business.