A joint statement from the charities said that Merlin was "joining" Save the Children "to create a world-class humanitarian health force for children and their families living in some of the toughest places in the world".
A Merlin spokeswoman said that the charity’s board had stood down today and been replaced by a new group of trustees that would work closely with Save the Children.
She said the move was being made "to secure the long-term future" of the work of the charity, which had income of £68.9m in the year to 31 December 2011.
A transition team is being formed that will develop a plan over the next few months for the 16 countries where Merlin works and its head office in London, she said.
Asked if its name would change, the spokeswoman said Merlin remained a separate legal entity and the brand would be reviewed during the transition stage.
"The priority is to ensure that we are safeguarding the delivery of our work," she said.
"For those teams transferring as part of this plan, our expectation is that there will be a phased transition of Merlin’s overseas programme operations and head office teams to Save the Children, which we are aiming to complete within 18 months."
A statement from both charities said Merlin’s network of front-line health workers would be combined with Save the Children’s work in more than 120 countries.
Carolyn Miller, chief executive of Merlin, said: "By combining Merlin’s expertise and flexibility with the heritage and reach of Save the Children, we will create a unique proposition: a global humanitarian health force that can provide faster and more cost-effective support in a humanitarian crisis.
"For the last 20 years Merlin has been providing medical expertise in some of the toughest places across the globe. By joining Save the Children, this is a chance to realise our ambitious plans to reach and provide healthcare to more of the world’s most vulnerable people and secure a sustainable future for Merlin’s life-saving work."
The health and hygiene multinational Reckitt Benckiser, a long-standing partner of Save the Children, is contributing £1m to support Merlin in joining the international children’s charity, the statement said.
Justin Forsyth, chief executive of Save the Children, which had an income of £284m in 2012, said: "Save the Children has had a long-term ambition to extend our front-line health work to help millions more children and their families globally.
"By joining Merlin’s operations to ours, we will massively extend our operational reach, working together to create a larger and stronger network of health workers around the world."