Usernames and passwords of some of Yahoo's e-mail customers have been stolen and used to gather personal information about people they have recently corresponded with.
Yahoo, the second-largest e-mail service after Google's Gmail (according to research firm comScore) did not say how many accounts were affected. There are 273 million Yahoo mail accounts worldwide, 81 million of them in the United States.
It is the latest in a string of security breaches that have allowed hackers to grab personal information using software that analysts say is ever more sophisticated. Up to 70 million customers of Target stores in the US had their personal information and credit and debit card numbers compromised late last year and Neiman Marcus was the victim of a similar breach in December.
"It's an old trend, but it's much more exaggerated now because the programmes the bad guys use are much more sophisticated now," said Avivah Litan, security analyst at technology research firm Gartner. "We're clearly under attack."
In a blog post on its breach, Yahoo said: "The information sought in the attack seems to be names and e-mail addresses from the affected accounts' most recent sent e-mails."
Hackers are likely to be looking for additional e-mail addresses to send spam or scam messages. By sourcing real names from users’ Sent folders, hackers could try to make bogus messages appear more legitimate to recipients.
"It's much more likely that I'd click on something from you if we e-mail all the time," said Richard Mogull, analyst and chief executive of Securois, a security research and advisory firm.
The bigger danger is that access to e-mail accounts could lead to more serious breaches involving banking and shopping sites. People often reuse passwords across many sites and sites use e-mail to reset passwords. Hackers could try logging in to such a site with the Yahoo e-mail address and ask that a password reminder be sent by e-mail.
Ms Litan said hackers appeared to be "trying to collect as much information as they can on people. Putting all this stuff together makes it easier to steal somebody's identity".
Yahoo said the usernames and passwords were not collected from its own systems, but from a third-party database.
The breach is the second mishap for Yahoo's mail service in two months. In December the service suffered a multi-day outage that prompted Yahoo CEO Marissa Mayer to issue an apology.
Yahoo said it was resetting passwords on affected accounts and "implemented additional measures" to block further attacks. The company would not comment beyond the information in its blog post and said it was working with law enforcement authorities.