Yahoo said on Thursday that information associated with at least 500 million user accounts was stolen from its network in 2014 by what it believed was a "state-sponsored actor".
The data stolen may have included names, email addresses, telephone numbers, dates of birth and hashed passwords but may not have included unprotected passwords, payment card data or bank account information, the company said.
"The investigation has found no evidence that the state-sponsored actor is currently in Yahoo's network," the company said.
Yahoo said it was working with law enforcement on the matter.
It was not clear how this disclosure might affect Yahoo's plan to sell its email service and other core internet properties to Verizon Communications.
Verizon said in July it would buy Yahoo's core internet properties for US$4.83 billion.
Verizon said on Thursday it was notified of the breach in the last two days.
"We will evaluate as the investigation continues through the lens of overall Verizon interests .. Until then, we are not in position to further comment," the company said.
(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sriraj Kalluvila)