As part of the agreement, Sony will sell its entire holding of 7.04 per cent that it acquired in 2009, back to Sharp Display Products Corporation (SDP), a wholly-owned subsidiary of Sharp.
Sony will receive cash consideration equal to its original investment of 10 billion yen (USD 126 million) in SDP by end of June, 2012.
Recently, Sony has also ended its joint venture with Samsung Electronics to produce flat panels.
The two Japanese companies have been facing stiff competition in TV business from rivals such as Samsung in the wake of rising yen.
"No material impact is anticipated on Sharp's and Sony's consolidated financial forecasts for the fiscal year ending March 31, 2013," according to a joint statement by the two companies.