The sale announced Monday marks the second time in two years that Verizon has snapped up the remains of a fallen Internet star as it broadens its digital reach. The nation's largest wireless carrier paid $4.4 billion for AOL last year.
Verizon won the Yahoo bidding after a five-month auction.
Yahoo Inc. is parting with its email service and websites devoted to news, finance and sports in addition to its advertising tools under pressure from shareholders fed up with a steep downturn in the company's revenue during the last eight years.
The deal is expected to close in 2017's first quarter.
It had been expected to end the four-year tenure of Yahoo Chief Executive Marissa Mayer, but she said early Monday that she expects to stay with the company.
"I love Yahoo, and I believe in all of you," Mayer said in a statement. "It’s important to me to see Yahoo into its next chapter."
Verizon was considered the front-runner to buy Yahoo.
The mobile and broadband company has the means to make an acquisition this large, and analysts have said Yahoo would complement Verizon as it continues to bolster its media efforts.
Yahoo properties such as Yahoo Finance and its online lifestyle magazines could be a valuable addition to the telecom company's portfolio, expanding its audience and reach and opening additional revenue opportunities as its pool of new potential mobile and broadband customers dwindles.
Like AOL, Yahoo boasts a sizable and sophisticated digital advertising business, which Verizon could use to develop new revenue streams.
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