Jeff Weiner will continue to head the social network, and will report to Microsoft's chief executive Satya Nadella.
The acquisition comes four years after LinkedIn was hit by a major cyber attack - and last month a hacker caused alarm by claiming he had more than 100 million logins for sale.
Mr Weiner hopes the merged companies can 'change the way the world works'
LinkedIn reported a net loss of $45.8m in the three months to 31 March, compared with $42.5m a year earlier.
Microsoft has been trying to move away from being solely a software company by focusing on services and cloud computing, while boosting growth has been a priority for LinkedIn.
Although Microsoft has paid a substantial premium for LinkedIn, the social network has been sold for considerably less than its peak of $270 a share in 2015.
The deal has been unanimously approved by the boards of both companies - however, the acquisition will have to be approved by regulators in the US, Canada, Brazil and the EU.