The US website provides users with a free set of online video editing tools, which enables users to manipulate video images without installing software on their computers.
The deal gives Yahoo! users the ability to create "multimedia mashups" of video and other media. The company will also work with Yahoo!'s media and advertising partners to create high-quality movie and video content.
Jumpcut said: "Joining forces with Yahoo! Video will provide the resources to bring Jumpcut users and our partners more great social media experiences. As part of Yahoo! we'll be working on bringing video editing and remixing to everyone with an Internet connection."
The acquisition is the latest move by the internet media giant to capture a share in the booming market of user-generated content web sites.
Recent speculation has also indicated that the company is considering purchasing US social network site Facebook.
The latest deal brings Yahoo! closer to other video-sharing sites such as YouTube and Google Video which have experienced huge surges in user numbers. YouTube is currently the 13th most visited website, more than 65,000 videos are uploaded every day on the site.
Founded last year by Mike Folgner and Ryan Cunningham, Jumpcut is owned by San Francisco-based MiraVida Media