From1 October David Jones' electronic sections will be branded "David Jones Electronics, Powered by Dick Smith".
David Jones electronics' staff and products will be transferred to Dick Smith, which will take responsibility for a range of products within the department stores, including televisions, computers, tablets, home office, audiovisual and other digital products.
The development comes as Woolworths confirmed just weeks ago that it had fully sold off the struggling Dick Smith to Anchorage Capital Partners and Mangement.
David Jones CEO Paul Zahra said in a statement that the electronics business had been something David Jones had been coming to terms with over a number of years.
"For some time we have reported on the challenges that our electronics business has faced, including deflation and aggressive discounting," he said.
"Our agreement with Dick Smith enables us to remove the risks associated with this business and preserves our ability to participate in the sales and profit upside that results from combining both our businesses."
Dick Smith CEO Nick Abboud said the deal would help boost the retailer's buying power and allow it to offer better prices to customers.
"The ability to combine the David Jones Electronics business with our existing Dick Smith business will create critical mass which will strengthen our buying power, allowing for more competitive prices for customers," he said.