The six-year-old agency, run by Mitchell Kaye, will move into Engine's UK HQ in London's Great Portland Street later this year in a move to bolster the group's consumer firepower.
The deal was due to be officially announced tomorrow.
The group is understood to have been in talks with Mischief for the past five months. Mischief will bring with it clients such as Unilever, QVC, BAA and Electronic Arts.
Engine corporate PR arm MHP CEO Sacha Deshmukh claimed Engine's PR capability was now 'unrivalled'. The group's main PR offering is MHP Communications, specialising in corporate and financial comms and public affairs.
Deshmukh said the move had been made to strengthen the group's consumer offering beyond the confines of Slice.
'The work they were doing was great but it was a smallish team,' said Deshmukh. 'The creative strength in Mischief is enormous. We want to significantly grow our consumer PR strength.'
The purchase of PRWeek's 2010 Consultancy of the Year is the latest stage in an aggressive growth strategy by Engine Group, which is the UK's largest unlisted marcoms group.
Last year, the group merged the Mandate, Hogarth and Penrose Financial brands to form MHP Communications. In addition, Engine Group has acquired US-based marketing firm Noise, but delayed plans for a proposed stock market float.
Engine is understood to have acquired Mischief for a mixture of cash and equity, paid to both majority shareholder Mitchell Kaye, Mischief's founder and MD, and other shareholders such as Shine owner Rachel Bell.
Mischief will merge with Engine's consumer PR and experiential agency Slice and will move into Engine's UK HQ in Great Portland Street, London in August.
The new business will keep the Mischief name, and have 75 staff. Kaye will become the new agency's CEO and has not been handed an earn-out deal.
He said: 'The next step for us is to take our work and put it on a much bigger stage.'
There have been no redundancies as a result of the deal but Slice MD Nadia Gabbie is set to leave the agency. It is not known if she has a new role lined up.
The Slice brand will not completely disappear. The agency will become a subsidiary of Mischief, working as an experiential division led by Will Mould.