Through the acquisition, the iPhone maker also gains a line of high-end headphones popular with a young and urban demographic.
As expected, Beats co-founders Iovine and rapper Dr. Dre will join Apple as part of the acquisition.
The deal is seen as Apple's effort to jump-start a so-far uneven attempt to make headway in music streaming, the fastest-growing segment of the market. Pandora Media Inc (P.N) and Spotify have raced ahead while Apple's eight-month-old iTunes Radio has not made much of an impact.
The transaction is expected to close in the fourth quarter, Apple said on Wednesday. Shares in the company stood largely unchanged in after-hours trade.