Yahoo currently offers 1 gigabyte for its free mail service and 2GB for its premium fee-based service. Google's free Gmail service offers more than 2.5GB of storage, and Windows Live Hotmail offers 2GB for free.
"We are watching the trend lines of how people are using e-mail...and they are sending more photos and videos and rich media," said John Kremer, vice president of Yahoo Mail.
Google began the storage wars in earnest when it launched Gmail in April 2004 with 1GB of storage. Yahoo Mail, which launched in 1997 with 4MB of storage, upgraded to 100MB of storage shortly after Google's Gmail announcement, bumped it up to 250MB in late 2004, and then up to 1GB in 2005.
With 250 million users, Yahoo Mail is the largest global e-mail provider and the largest in the U.S., according to comScore.