The Pringles business will be combined with Diamond, known for its Pop Secret popcorns, Kettle crisps and Emerald nuts brands.
P&G will receive $1.5bn of Diamond stock and own 57pc of the new company, the companies said in a statement.
Diamond, which will hold the rest of the enlarged company, will also assume $850m of Pringle debt.
The addition of Pringles will more than triple the size of Diamond's snack business, which expects net sales next year of about $1.8bn.
Diamond bought General Mills' Pop Secret business for $190m in September 2008 and potato chips maker Kettle Foods for $615m in last year.
"Pringles is an iconic, billion dollar snack brand with significant global manufacturing and supply chain infrastructure," said Michael J. Mendes, chairman and chief executive of Diamond Foods.
"This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products."
Bob McDonald, president and chief executive of P&G, said: "This is also a terrific deal for our shareholders - maximizing value and minimizing earnings per share dilution."
P&G said the deal, which will free the company to focus on cosmetics and healthcare products, will add about 50 cents a share to its earnings.
Shareholders will be able to exchange P&G shares for shares in Diamond.
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