The service, built on Google AdWords advertising technology, provides the ability to buy search advertising on AOL client applications and .
Before the service, advertisers did not have the ability to segment and optimise traffic coming from AOL.
Mike Kelly, president of AOL Media Networks, said: "Our advertising clients have told us they want the ability to target their search advertising to users of AOL Search, and now with AOL Search Marketplace we can offer this service. We have found that there is a significant impact when search and display campaigns are coordinated.
"The addition of the AOL Search Marketplace enables us to offer advertisers end-to-end solutions, everything from AOL to our industry leading third-party display network to video advertising and performance ads. This will let marketers better coordinate their advertising, and build greater efficiencies into their campaigns, with AOL."
The new service is the result of the expanded five-year strategic relationship AOL and Google entered into in December 2005. AOL has test marketed AOL Search Marketplace with about 30 advertisers over the previous five months.
AOL has also announced several enhancements to , including AOL Shopping and Commerce Search and AOL Local Search, which finds locations and reviews of local businesses, bars and restaurants.
The entire AOL Search network, which includes AOL.com, AOL client applications, Netscape and CompuServe, attracts more than 36m unique users each month. Last year AOL saw its advertising revenue climb 41% compared with 2005.