DeepMind combines techniques from machine learning and systems neuroscience to build algorithms for ecommerce, simulations and games applications.
The startup is currently in "stealth" mode and was founded by Demis Hassabis, Shane Legg and Mustafa Suleyman.
Google confirmed the acquisition but would not comment on the $400m price tag reported by tech website Re/code.
The DeepMind deal comes after Google’s acquisition of eight robotic companies in the past year, with the most recent acquisition being that of Boston Dynamics, a company that makes machines that run faster than humans.
DeepMind founder Demis Hassabis has been described as a computer game designer, AI programmer, neuroscientist and a chess "child prodigy".
Prior to founding DeepMind, he set up computer games company Elixir Studios in 1998. He was CEO of the company until July 2005, running a 60-strong team and produced games for Microsoft and Vivendi Univerasl.
The studio developed games including Syndicate, Theme Park, Black and White, Republic and Evil Genius.
Hassabis was later a research fellow at UCL’s Gatsby computational neuroscience unit and worked on research papers including 'Is The Brain a Good Model For Machine Intelligence?'.