The deal comes just two days after Yahoo bought Qwiki, a video app for iPhone, for about $50m.
Founded in San Francisco in 2006, Xobni has been tabled for sale to a number of companies and appeared to be stalling. Yahoo, which still has a popular and mainstream email service, will see Xobni as a way to bolster its existing service with new features and staff talent.
Xobni – "inbox" spelt backwards – reorganises email according to the user's social contacts, meshing connections from SMS history, phone calls and Facebook or Twitter.
Announcing the deal, Xobni posted that its users will receive the same service until July 2014, though paid premium services will be dropped, and eventually Xobni will be "baked in" to the Yahoo email service.
"Did you ever meet someone who truly 'gets' you?" said Xobni's official statement. "That's how we feel about Yahoo. The power within every Xobni product is that it responds to how you communicate. Every day you demonstrate who and what is important to you. That can benefit not just your inbox or smartphone, but the many services you use. Yahoo gets that, and they want us to use our platform to make many Yahoo services better for you."
Xobni staff have been relocated to Yahoo's headquarters, including Xobni's chief executive Jeff Bonforte, himself a former Yahoo employee.
Yahoo's slew of acquisitions is part of chief executive Marissa Mayer's plan to turn the company around, largely deemed to be working by Silicon Valley. Yahoo's stock price has climbed to a five year high under Mayer, whose acquisition's included $1.1bn for light-blogging site Tumblr, news app Summly for about $30m and an undisclosed sum for sports app Bignoggins.
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image: © Leon Brocard