
The agency won the bookseller's account following a final shoot-out against Abbott Mead Vickers BBDO, Bartle Bogle Hegarty and Lowe.
The review is understood to have been prompted by Waterstone's parent company HMV's acquisition of the Ottakar's chain of bookshops in May 2006.
CHI & Partners will handle print, TV and outdoor communications for the expanded chain, which now includes Ottakar's 141 stores nationwide.
St Luke's, the incumbent, won the Waterstone's account in 2005, following a shoot-out against Beechwood.
Its most recent TV campaign for the retailer, which ran in the run-up to Christmas last year, featured animated characters stepping into the plot of various genres of books.