AdWhirl allows iPhone app developers to choose which ad network will sell their ad inventory.
The company is growing fast, with about 1,000 publisher partnerships and ad exchange agreements with five networks, AdMob among them.
AdMob said it intends to expand AdWhirl's exchange product, while keeping the platform open sourced and transparent for developers.
Developers will still be able to switch ad networks on the fly, the company said.
Just two months ago, AdMob announced it would cut off access to ad exchange platforms like AdWhirl or TapJoy -- citing technical glitches.
The company eventually reversed its stance after app developers complained, saying it would delay its decision until August -- instead, the company has decided to acquire AdWhirl.
Omar Hamoui, CEO of AdMob, said the acquisition will help maximise monetisation opportunities for app developers and publishers.
Hamoui said: "By offering this first ever open source ad mediation solution, our goal is to provide a much needed open, unbiased and transparent tool for mobile publishers who would like to build financially rewarding businesses that are fueled by advertising."