The merger has come about thanks to Merrill's concerns over its balance sheet, which has been hammered by credit crunch-related asset writedowns.
It had faced a corresponding loss of its share price last week.
The final straw for the bank is thought to have come with fellow Wall Street giant Lehman Brothers' move towards declaring bankruptcy - with many speculating that Merrill would be the next bank to fall.
A statement from BoA mapped out the terms of the deal: Merrill is to exchange each BoA share for 0.85 of its own, which has been priced at $29.
Analysts praised the merger, which effectively guarantees that the 94-year-old bank will not collapse in the manner of Lehman or Bear Stearns.
"If BoA can put a fence around the bad assets, that retail distribution is a powerhouse,'' Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors, told Bloomberg.
"The Merrill Lynch combination makes more sense than a Lehman deal."
Global banks have faced over $400 billion of credit crunch related losses since the beginnings of the crisis last year.