The new Yahoo Mail, currently in beta, will identify words, links, people and subjects from users' emails and use the data to serve relevant advertising. Users can opt out of the ad service using its ad interest manager tool.
A key feature of the new service is its social media capability. Users can integrate the mail service with Facebook and Twitter accounts to create a news feed based on updates from friends and followers within their inbox.
Yahoo Messenger can also be run from within the inbox and Flickr and YouTube can be viewed in emails.
It can now also be used across desktop, mobile and tablet devices. Other features include enhanced anti-spam and search capabilities and unlimited storage.
Yahoo said the changes will make the service "faster, easier, safer and more social". The beta service is opt in and available in 25 of Yahoo!'s markets.
Earlier this month Yahoo! unveiled a new ad format in the form of a takeover on its email log-in page. The new ads offer advertisers a larger canvas to make display ads more creative and to reduce ad blindness.
Yahoo! recently acquired online ad company Dapper for an undisclosed sum as part of its plans to extend the firm's technology into Smart Ads, its display advertising service.
In August Google rolled out its priority inbox system for Gmail, creating a two-tier inbox where a user’s more personal emails are prioritised.
