By BBC-Yahoo says hackers stole information from about 500 million users in 2014 in what appears to be the largest publicly disclosed cyber-breach in history.
The breach included swathes of personal information including names and emails as well as “unencrypted security questions and answers”.
It did not include any credit card data, the site said, adding it believed the attack was state-sponsored.
In July, Yahoo was sold to US telecoms giant Verizon for $4.8bn (£3.7bn).
The FBI has confirmed it is investigating the attack.
News of a possible major attack on the technology firm emerged in August when a hacker known as “Peace” was apparently attempting to sell information on 200 million Yahoo accounts.
Yahoo on Thursday confirmed the breach was far bigger than first thought.
The data taken includes names, email addresses, telephone numbers, dates of birth and encrypted passwords.
Yahoo recommended all users should change their passwords if they had not done so since 2014.