Shares of Match jumped more than 5% in premarket trading on the news.
Match shareholders will receive one share of New Match and $3 per share in consideration, while IAC will receive $3 per share in cash.
"We've long said IAC is the 'anti-conglomerate' – we're not empire builders," Barry Diller, chairman and senior executive of IAC, said in a statement. "We've always separated out our businesses as they've grown in scale and maturity and soon Match Group, as the seventh spin-off, will join an impressive group of IAC progeny collectively worth $58 billion today."
IAC said in October it had submitted a proposal to members of Match's board of directors that would result in the full separation of Match from IAC.
Match has carved out a foothold in the online dating market, largely due to solid growth in its youth-oriented dating app, Tinder. It also includes other dating services like Match, Hinge, and OKCupid.
The Match spinoff has been approved by the boards of both companies, but still requires the approval of shareholders, among other stakeholders.
—CNBC's Annie Palmer and Reuters contributed to this report.