Facebook Connect allows the social networking site's 350 million users to log into other sites using their Facebook ID.
Yahoo! will integrate Facebook Connect functionality with most of its products, allowing users to connect with their Facebook friends while on Yahoo!
This partnership works both ways and will enable users to get updates from Facebook while they are on a Yahoo! page but will also allow them to upload status updates to the social network from Yahoo!
Jim Stoneham, vice president of communities for Yahoo!, said: "With this integration, we are opening the door for two of the internet's largest online communities to make it easier for people to stay connected.
"It also enables us to further the Yahoo! Open Strategy, which is aimed at making experiences dramatically more open, social and personally relevant for the more than 500 million people who visit Yahoo! each month."
Elsewhere, Google has announced that people using Twitter will be able to login to any site that uses its Google Friend Connect service.
The search giant launched Google Friend Connect, which allows users to connect with their friends on different websites, last May in an effort to boost its social media credentials, but it has yet to catch on in any significant way.