Under the agreement, Yahoo can run ads supplied by Google alongside its own search results and on some of its Web sites in the United States and Canada.

Yahoo will decide where the Google ads will run and which search terms it can use, Yahoo said in a statement.

The deal initially spans four years, with options to renew it up to a period of 10 years.

Yahoo said earlier on Thursday that it had failed to reach a deal with software maker Microsoft, largely because it did not accept a proposal by Microsoft to buy only its search business.

Yahoo said it expects the Google deal to generate an additional $250 million to $450 million operating cash flow within its first year.