Microsoft will pay $196 per share for the company.
LinkedIn CEO Jeff Weiner will remain CEO of the professional social network, and will report directly to Microsoft CEO Satya Nadella.
Under the terms of the acquisition, LinkedIn will maintain its "distinct brand, culture, and independence," and Microsoft says LinkedIn cofounder and chairman of the board Reid Hoffman and Weiner "both fully support" the purchase.
The deal is expected to be completed this calendar year.
LinkedIn shares jumped 48% following the news in pre-market trading. Microsoft shares, which were halted in pre-market trading pending the news, have since re-opened and fallen as much as 5.2%.