Facebook is paying $US1 billion in cash and stock to buy the photo-sharing smartphone app, Instagram.
Instagram was launched in October 2010 - initially just for the iPhone before being offered as an Android app last week.
The BBC reports that the free app has proved hugely popular.
It allows users to apply filters to the pictures they take - changing the colour balance to give the images a different feel - before they are uploaded.
Facebook's chief executive, Mark Zuckerberg, has pledged to continue to develop Instagram as a separate brand, allowing it to post to rival networks.