The move lets GM exit the European market.
General Motors is selling its Opel and Vauxhall subsidiary to PSA Group, which will become the second-largest automotive company in Europe, with a 17% market share.
The Detroit-based automaker also is selling its Financial's European operations in the deal, which is valued at $2.3 billion.
The move lets GM exit the European market.
"For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum," said Mary T. Barra, GM chairman and chief executive officer.
"We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility."
PSA Group, based in France, makes Peugeot and Citroen cars, and it says it plans to return the former GM brands to profitability.
The deal includes PSA taking over 12 manufacturing facilities employing 40,000 people, according to The Associated Press.
According to GM, the deal also allows future work with PSA: "GM and PSA also expect to collaborate in the further deployment of electrification technologies and existing supply agreements for Holden and certain Buick models will continue, and PSA may potentially source long-term supply of fuel cell systems from the GM/Honda joint venture."
GM reached record earnings in 2016, coming it at $12.5 billion.
For 2016, North America was GM's biggest market. It recorded declines in South America and Europe, and the international market - including China - fell from $1.4 billion to $1.1 billion.