Kayak allows users to compare hundreds of travel sites when looking for flights, hotels, and rental cars. The deal is expected to expand Priceline's travel business and build Kayak's brand.
The deal needs the approval of Kayak's shareholders and of regulators. It is expected to close in the first quarter of next year.
Priceline said Thursday that it will pay $500 million in cash and $1.3 billion in stock and assumed stock options for the company.
Kayak will continue to operate independently as a Priceline Group company.