The acquisition of the Jerusalem-based company was announced later today after the news broke in Israel.
It is the largest ever purchase of an Israeli tech company.
"Mobileye brings the industry's best automotive-grade computer vision and strong momentum with automakers and suppliers," Intel CEO Brian Krzanich said in a statement.
"Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers."
The companies are already working together on a project with BMW to deploy a fleet of around 40 self-driving cars later this year.
The Israeli firm ended the collaboration in September last year over the car maker's handling of a fatal crash involving one of its vehicles in the United States.
The car was being driven in the since rebranded "auto-pilot" mode when the accident occurred.
"Tesla's response to the May 7 crash, wherein the company shifted blame to the camera, and later corrected and shifted blame to the radar, indicated to Mobileye that Mobileye's relationship with Tesla could not continue," the company said in a statement last year. "
A probe of the incident by the National Highway Safety Traffic Administration and the National Transportation Safety Board was ongoing at the time of the split but later found that the crash could not be attributed to software errors.