Toyota has agreed to buy the 8.7% stake owned by General Motors in Fuji Heavy Industries, the owner of Subaru.
Toyota is now Fuji's majority owner
The 35.4bn yen ($310.5m; £176m) deal will make Toyota the biggest single shareholder in Fuji.
General Motors wants to exit completely from Fuji, and plans to sell its remaining 11.4% stake on the market.
Toyota and Fuji will now work to reach agreement on future collaboration, the two Japanese firms said. Toyota also has shares in Daihatsu.
In addition, it owns a stake in truck firm Hino Motors.
The latest US car sales figures showed that GM saw a drop of 24% in September, while Toyota enjoyed a 10% rise.
Toyota has recently said that it lacks the small models needed for expansion in emerging markets like China and India.