The funding is being led by CapitalG, Alphabet's growth investment fund, which has also backed tech companies such as home-renting platform Airbnb and payments firm Stripe.
It is the latest challenge to Uber, which is appealing against a decision by London transport bosses to strip it of its licence to operate in the capital.
The investment represents a further complication in the tangled web of alliances in the sector.
Lyft, which is currently a distant second to Uber in the ride-hailing market, said the latest round of funding would boost its valuation from $7.5bn to $11bn. Uber has been valued at as much as $70bn.
Alphabet already has a relationship with Lyft through a deal Lyft struck with Waymo - Alphabet's self-driving car arm - earlier this year.
The Google owner is also linked to Uber after a second investment arm, GV, backed it in 2013 - but that was before Uber began to develop autonomous cars, in direct competition to Alphabet.
This year, Waymo sued Uber, alleging trade-secret theft, in a case that is set to go to trial in December.
Lyft has been pushing expansion this year, saying it is available across 41 US states and completes more than a million rides a day.
It also has ties with carmaker General Motors, which has invested $500m.
CapitalG partner David Lawee, who will join Lyft's board as part of the latest fundraising, said:
"Ridesharing is still in its early days and we look forward to seeing Lyft continue its impressive growth."