Virgin will become Zavvi in November
Sir Richard Branson has sold his UK chain of Virgin record stores to a group of senior staff at the business.
The deal, whose value has not been disclosed, will see Virgin's 125 UK and Irish Megastores rebranded as Zavvi.
The business will continue to be run by the current management team headed by managing director Simon Douglas.
High Street music retailers have been fighting for their survival as CD sales have been dramatically supplanted by digital music downloads.
HMV has suffered a sharp fall in sales while a number of smaller firms, including MVC, Music Zone and Fopp, have collapsed.
The deal ends Sir Richard Branson's 30-year involvement with High Street music retailing.
Earlier this year, he disposed of Virgin's US record stores.
"In the last six years we have been withdrawing from entertainment retailing which is no longer viewed as core to the group's future," Sir Richard said.
No details have been given of who is financing the management buyout.
The management team said it believed the business, which employs 2,500 staff, had a bright future despite the general music malaise on the High Street.
"We will deliver a new brand that lives and breathes entertainment and delivers high quality enthusiastic service to existing and new customers," Mr Douglas said.