Expedia said it intended to split into two publicly traded companies by the third quarter of 2011.
TripAdvisor will be separated, while Expedia will continue to include brands Hotels.com, Hotwire and others.
TripAdvisor offers travel advice and reviews posted by other travellers and attracts more than 40 million visitors a month across 29 countries.
The spin-off is subject to conditions.
The board said it expected the transaction to take "the form of a distribution of stock of TripAdvisor to Expedia shareholders or a reclassification of stock, with the holders of Expedia stock to receive a proportionate amount of TripAdvisor stock".
In either case it will be a tax free transaction, the board added.
Shares in Expedia rose 15% to $25.89 in after-hours trading in New York.Expedia to spin off TripAdvisor