US-based Tango has 200 million users and the deal is expected to help China-based Alibaba strengthen its presence in the sector.
The mobile messaging service sector has seen robust growth in recent years and many leading firms have been keen to tap into its potential.
Last month, Facebook bought WhatsApp, one of the biggest players in the sector, in a deal worth $19 billion.
“The sheer power of free communication has changed the way we connect with others,” Uri Raz and Eric Setton, founders of Tango, said in a blog post.
“Today, the amount of texting from over-the-top messaging apps surpasses carrier SMS.”
Alibaba and Tango did not disclose the size of the stake the Chinese internet giant has picked up in the messaging service.
However, some reports indicated that the investment valued Tango at close to $1 billion.
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