The new deal will see the existing licensed Toys R Us operations, which includes 100+ stores and offices throughout Asia, become 70 per cent owned by Toys R Us and 30 per cent owned by Li & Fung Retailing.
The terms of the deal also allows Toys R Us to acquire the remaining share of the business in the future.
The venture will include 90 existing Toys R Us stores in Brunei, China, Hong Kong, Malaysia, Singapore, Taiwan and Thailand, which will be considered wholly owned operations of Toys R Us.
The added stores will increase the number of the retailer's wholly owned international locations by 17 per cent.
The remaining 14 stores in the Philippines and Macau continue to be operated under a licence agreement.
Jerry Storch, chairman and CEO, Toys R Us, commented: "Li & Fung has been a terrific partner in establishing and growing the Toys R Us brand in Asia, and we are pleased to continue our work with them as we enter this exciting next phase of our business development there.
"We believe there is significant growth opportunity for our company in this region, and we look forward to an aggressive expansion of our business in both existing and new Asian markets, including Northern China. International growth remains a key part of our long-term business strategy, and we are proud to celebrate this important milestone for our company."
Chairman of the Li & Fung Group, Dr Victor Fung, added: "Over the past 25 years we have opened over 100 Toys"R"Us stores across Asia. This successful business has benefited from high brand awareness and the recruitment of nearly three million members in our Star Card loyalty program in the markets we operate.
"We are pleased to return to the joint venture arrangement with Toys R Us, in anticipation of a new phase of business growth. The new agreement will enable us to expand into new geographies such as Northern China, which will help us leverage even further growth in the region."