Following the acquisition, Toys R Us will continue to operate the two FAO Schwarz retail stores in New York and at the Caesars Palace in Las Vegas.
Toys R Us also said it will offer jobs to existing FAO Schwarz staff at both locations.
Jerry Storch, chief executive of Toys R Us said in a statement: "We will work tirelessly to preserve the distinctiveness and integrity of the FAO Schwarz stores and brand as we grow the business."
The company said it will continue to operate the FAO Schwarz e-commerce and catalogue operations. All merchandising, management, distribution and marketing operations will immediately be taken over by Toys R Us.
Earlier this year Toys R Us, expanded its online brand with the purchase of eToys.com, babyuniverse.com, Toys.com and parenting resource site, ePregnancy.com.