Microsoft is counting on Skype to help it catch up in some the hottest markets in technology and media. Those areas include online socializing, mobile phones and digital video.
Skype's roughly 170 million users made 207 billion minutes of voice and video calls last year - almost 400,000 years' worth.
Microsoft says Skype will operate as a division within the world's largest software maker. Skype CEO Tony Bates is joining Microsoft to run the division. He will report to Microsoft CEO Steve Ballmer.
Microsoft shares rose 5 cents to $27.23 in afternoon trading.