Expedia will continue to run brands such as Hotels.com and Hotwire.
The travel agent says it expects the transaction will take the form of a distribution of TripAdvisor stock to Expedia shareholders or a reclassification of Expedia shares.
The move, which is expected to complete in the third quarter of the year, is still subject to conditions including shareholder and board of directors’ approval.
It is not thought the separation will affect any management roles at the two companies.
The move aims to let existing shareholders benefit from TripAdvisor’s growth while Expedia increases investment in marketing in order to ward off its closest competitor Priceline.com, according to analysts.
Shares in Expedia rose 15% to $25.89 (£16.15) in after hours trading following the announcement.
Expedia purchased TripAdvisor in 2004 for $212m (£132m). TripAdvisor and its 18 related brands now attract more than 50 million unique monthly visitors across 29 countries and generated $486m (£303m) in sales in 2010.
TripAdvisor appointed former Hotwire executive Barbara Messing as CMO to lead its global consumer marketing efforts including brand development and mobile partnerships.