It has grown into a range of sectors with a particular focus on the internet and retail, but Diller said it now makes sense to reorganise the company.
He said: "One of the reasons we've stayed with some of our more transactional businesses is that we needed their earnings to allow us to invest in emerging internet businesses. Now that we have real scale in the pure internet units, it makes nothing but sense to me to reorganise the whole."
The reorganisation involves several businesses moving out of IAC, which will remain as the umbrella for around 30 pure internet businesses including Ask.com and dating site Match.com.
The four new companies will be: HSN; Ticketmaster; travel business Interval International; and mortgage and loan exchange LendingTree.
Diller will continue as chief executive and chairman of IAC and Mindy Grossman, Sean Moriarty, CD Davies and Craig Nash will continue as chief executives of HSN, Ticketmaster, LendingTree and Interval respectively.
IAC's shareholders will own 100% of the equity in all five companies.