Terms of the deal were not disclosed, but earlier reports suggested that the company had offered as much as $250m for Photobucket.
A spokesperson for Fox Interactive told vnunet.com that the company expects to close the deal within 30 days.
Photobucket chief executive and co-founder Alex Welch said on a company blog that the acquisition would make little difference to the service.
"First and foremost, we expect nothing to change in our day-to-day operations. After the transaction is closed and finalised, the plan is to operate Photobucket as an independent, standalone company within [Fox Interactive Media]," he wrote.
Photobucket has around 40 per cent of the online photography market, according to an April study by research firm Hitwise.
The move will also link Photobucket with social networking giant MySpace. Last month, a feud over a movie promotion lead MySpace to block Photobucket video clips from user profile pages causing a public spat between the two companies.
Fox Interactive also announced the purchase of Flektor, an online service that allows users to edit and create photo and video mash-ups.
Despite Welch's assurance that nothing would change at Photobucket, Fox said that it plans to spread technology from both of its new acquisitions throughout its network which includes Foxsports.com and Americanidol.com.
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