The Netflix-like service, called Lionsgate Entertainment World, will be available exclusively on Alibaba's TV set-top boxes and is expected to launch in August.
Financial details on the transaction were not provided in the Lionsgate announcement late Monday.
Alibaba has been expanding beyond basic consumer products this year, rolling out a broad range of digital entertainment services that include digital downloads.
The company also acquired film and TV production company ChinaVision Media Group for US$804 million in March.
Alibaba plans to make a public listing in the U.S. sometime this year.