The deal was announced late last night in a post on The Daily Beast. Brown will become editor-in-chief of the newly merged operation, putting the former Vanity Fair and New Yorker editor back in charge of a printed title for the first time in eight years.
Brown will work alongside Daily Beast CEO Colvin, who was previously behind the launch of The Week and Maxim magazines as president of Dennis Publishing's US business.
The two sides have been in on-off talks for weeks, but apparently could not agree a new structure for the hybrid operation that brings together the October 2008-launched Daily Beast, named after the newspaper in Evelyn Waugh's Scoop, with the 77-year-old magazine.
The deal is the latest move in a bumpy few months for Newsweek. It was offloaded by the Washington Post in August to nonagenarian billionaire Sidney Harman. It puts him in partnership with IAC chairman Barry Diller, who owns the Huffington Post, rival to the Daily Beast.
The new business will be called The Newsweek Daily Beast Company, owned equally by Diller's IAC and Harman.
In a post on The Daily Beast, Brown said that the union of The Daily Beast and Newsweek magazine finally took place with a coffee-mug toast between all parties, in a conference room in the Daily Beast's headquarters in the IAC building on Manhattan's West 18th Street.
Brown wrote: "What does this exciting new media marriage mean? It means that The Daily Beast's animal high spirits will now be teamed with a legendary, weekly print magazine in a joint venture."
She added that the merger represented a new opportunity for all the editors and writers at The Daily Beast, named a top-five social media site by Time in August, who have worked so hard to create the site's success.
They include a host of former newspaper editors such as executive editor, Edward Felsenthal, and managing editor, Jane Spencer, who are formerly of The Wall Street Journal, as well as columnists including Howard Kurtz, who joined from The Washington Post.
Brown continued: "Working at the warp-speed of a 24/7 news operation, we now add the versatility of being able to develop ideas and investigations that require a different narrative pace suited to the medium of print.
"And for Newsweek, The Daily Beast is a thriving frontline of breaking news and commentary that will raise the profile of the magazine's bylines and quicken the pace of a great magazine's revival. I'm impressed with how Newsweek's outstanding staff has continued to put out a lively, well-informed magazine after the departure of their tireless editor, Jon Meacham."