The deal will mean that BAA - now known as Heathrow Airport Holdings - will be responsible for just four UK airports compared with its original seven. The remaining ones are Heathrow, Southampton, Aberdeen and Glasgow.
The company formerly known as BAA is to sell Stansted airport to the Manchester Airports group for £1.5 billion.
BAA's airport ownership was brought into question when the Office of Fair Trading referred the company's holding to the Competition Commission (CC). After a long inquiry the CC ruled that BAA's airport ownership was uncompetitive.
Criticising the company's performance, the commission said that BAA must sell Gatwick and Stansted and one of either Edinburgh or Glasgow airports.
Gatwick had already been sold by the time of the ruling and since then BAA has sold Edinburgh. It held out for some time before finally accepting the ruling on Stansted - mounting a succession of ultimately unsuccessful legal challenges.
Heathrow chief executive Colin Matthews said: "Stansted airport and its people have been part of our company for a long time... and we are proud of its achievements."
The sale is expected to close by the end of February 2013.
Manchester Airports Group (MAG) owns and operates Manchester, East Midlands and Bournemouth airports. MAG also includes the commercial property company, MAG Developments, which has a £350 million portfolio across the three airports.
Stansted in Essex is London's third busiest airport after Heathrow and Gatwick and is the UK's fourth busiest airport. It handles around 17.5 million passengers and more than 131,000 flights a year. A popular airport for no-frills airlines, Stansted is home to 14 airlines serving more than 150 destinations in 32 countries.
More than 10,000 people work at Stansted including 1,400 airport employees. Stansted's pre-tax profits in 2011 amounted to £86.6 million and are estimated to be £94.2 million in 2012.