Financial terms of the deal were not disclosed.
XIV's Nextra offering is a storage area networking technology that combines software and off-the-shelf hardware into a high-performance storage grid that provides advanced management features like built-in virtualization and remote mirroring.
The company says Nextra lets businesses easily and economically assemble and expand homogeneous storage networks by using commodity hardware.
Traditional corporate storage networks are built on tiers of increasingly expensive devices, with the priciest systems reserved for handling the most critical data.
XIV claims its approach is less expensive and easier to manage.
Nextra has been in production for two years and is currently managing more than 4 petabytes of stored data across XIV's customer base, according to the company. Customers include Israel's Bank Leumi.
IBM apparently sees significant merit in XIV's approach to storage. Reports out of Israel say IBM paid between $300 million and $350 million to acquire the company -- a relatively high sum for a startup. An IBM official declined to comment on the reports.
XIV is led by Moshe Yanai, a former EMC executive who helped design EMC's Symmetrix storage architecture. Yanai joins IBM as part of the deal.
It's expected that demand for computer storage systems will remain strong as more of the world's information goes digital.
According to the most recent numbers from analysts at IDC, EMC currently leads the $4.4 billion market for external disk storage systems with a 22% market share. IBM is second with 14%, while Hewlett-Packard ranks third with 13.4%.
Dell and Hitachi round out the top five with market shares of 9.3% and 8.5%, respectively.