The deal is reportedly valued between $40m and $50m.
Yahoo has acquired Qwiki, a mobile app that allows users of Apple’s iPhones devices to create videos, in a bid to extend its presence in mobile devices.
Following the acquisition, Qwiki’s app will continue to be supported by Yahoo, while its work force will shift to the internet giant’s New York offices.
Reports reveal that the deal is valued between $40m and $50m. The Qwiki app will convert pictures and videos that are already on iPhone into movies to share, including transitions and a soundtrack.
Yahoo social and personalisation VP, Mike Kerns, was cited by Bloomberg as saying that the new technology may be deployed to enable video creation on other sites of Yahoo.
"We’re clearly interested in using acquisitions as a means to bolster talent, bolster technology and improve our product suite," Kerns said.
The current deal marks Yahoo’s third acquisition since May 2013 when it acquired blogging service Tumblr for $1.1bn.