“We have big ideas for the future, and part of making them happen is building Instagram into a sustainable business,” it said.
Ads will appear in a few months and involve just a handful of firms.
Instagram was bought by Facebook for $1bn (£619m), but has never made a profit.
The company, which now has 150 million users, has been a favorite among consumers but has long left analysts wondering how it could turn enthusiasm among photographers into a business model.
Early efforts by Instagram to generate revenue were met with user backlash, such as when the company changed the terms of service to seemingly indicate that it would own user images and could sell those images to advertisers.
The failure of this move was acknowledged in the company’s posting.
Instagram and social media boom
“As always, you own your own photos and videos. The introduction of advertising won’t change this,” it said.
In an interview earlier this year with the BBC, Instagram co-founder Kevin Systrom said that Instagram must “fund its own future.”
Social media advertising is a booming business in the US.
According to research firm eMarketer, advertisers will spend $9.5bn on social network ads worldwide this year.
Facebook has boosted its efforts to gain a larger share of this ad spending.
This year, the company’s share of global mobile ad revenues will rise to 15.8% from 5.35% last year.