The company said in a statement that it would pay $4bn (£2.4bn) in cash and $15bn (£9bn) in Facebook shares as part of the deal.
The app's founders and employees will get $3bn (£1.8bn) of the shares as restricted stock that will vest over four years after the deal closes.
The purchase marks the largest single acquisition in Facebook's 10-year history.
WhatsApp is a real-time mobile messaging service with more than 450 million monthly users. The app has more than one million new registered users each day.
WhatsApp will "continue to operate independently and retain its brand" despite the acquisition, Facebook said.
Mark Zuckerberg says WhatsApp will continue to operate independently
"WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable," Facebook CEO Mark Zuckerberg said.
Founded by a Ukrainian immigrant who dropped out of college, Jan Koum, and a Stanford alumnus, Brian Acton, WhatsApp is a Silicon Valley startup fairytale.
"I've known (WhatsApp CEO) Jan (Koum) for a long time and I'm excited to partner with him and his team to make the world more open and connected."
He added that the service "doesn't get as much attention in the US as it deserves because its community started off growing in Europe, India and Latin America.
"But WhatsApp is a very important and valuable worldwide communication network.
"In fact, WhatsApp is the only widely used app we've ever seen that has more engagement and a higher percent of people using it daily than Facebook itself."
The acquisition will also see Mr Koum - a former Yahoo! engineer - join Facebook's board of directors.
"WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide," Mr Koum said.
"We're excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world."
Facebook is known to make bold moves to thwart competitors - it famously bought Instagram for $1bn after a weekend of negotiations.
Sky News
Mark Zuckerberg
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