The deal is expected to be formally announced Monday.
The Yahoo board met Sunday to approve the pulling the trigger on the deal. Hopes are high that Tumblr will give Yahoo more traction with younger audiences and social media while helping the service grow its nascent efforts to collect meaningful ad revenues.
The acquisition marks a crowning achievement for Tumblr, a startup that counts Chernin Group among its many backers. The service has been a hit among users for providing easy-to-use publishing tools that mix text, images and video.
Unclear at this point whether Tumblr will continue under its own brand name once under the Yahoo umbrella. CEO David Karp is expected to continue to lead the company.