Yammer will join the Microsoft Office division, led by Kurt DelBene, and the Yammer team will continue to report to current CEO David Sacks, Microsoft said in a statement.
"The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love," said Steve Ballmer, CEO of Microsoft. "Yammer adds a best-in-class enterprise social networking service to Microsoft's growing portfolio of complementary cloud services."
Microsoft said Yammer will continue to develop as a standalone service. Going forward, Microsoft will incorporate Yammer into offerings like SharePoint, Office 365, Microsoft Dynamics, and Skype.
Microsoft completed its $8.5 billion acquisition of Skype in October.
Yammer functions like Facebook for businesses. Corporate teams can join specific groups and keep each other updated on what they're doing. Where Facebook asks "What happened today?" in its status updates box, Yammer asks "What are you working on?"
"When we started Yammer four years ago, we set out to do something big," Sacks said. "We had a vision for how social networking could change the way we work. Joining Microsoft will accelerate that vision and give us access to the technologies, expertise and resources we'll need to scale and innovate."
In a note on the Yammer website, the company said customers will "continue to get a secure, private social network—delivered with the same focus on simplicity, innovation, and cross-platform experiences."
"With Microsoft's backing, our aim is to massively accelerate our vision to change the way work gets done through software that is built for the enterprise and loved by users," Yammer said.
News of a possible Yammer-Microsoft tie-up first emerged earlier this month in a report from Bloomberg. Microsoft then sent out invitations for a "major" press event last week, leading some to suspect it might involve the Yammer purchase, but it was actually Microsoft's Surface tablet. Redmond has had a rather busy few weeks; last week, it also took the wraps off Windows Phone 8.