Paypal is teaming up with three major Bitcoin payment processors so that certain retailers will be able to receive payments in the virtual currency via the firm's payment hub.
The three processors are BitPay, Coinbase and GoCoin.
The service has gone live and will initially be available to sellers of digital goods based in North America.
However, the payments will not be processed by Paypal itself, the company confirmed.
"We're proceeding gradually, supporting Bitcoin in some ways today and holding off on other ways until we see how things develop," wrote Scott Ellison, senior director of corporate strategy in a blog post on the Paypal website.
"Paypal has always embraced innovation, but always in ways that make payments safer and more reliable for our customers. Our approach to Bitcoin is no different."
Last month Paypal announced that its subsidiary unit Braintree, a payment processor used by firms such as Uber and Airbnb, was also looking at ways to handle Bitcoin payments.
Scott Green, founder of UK Bitcoin price comparison site Bittybot, said the new partnership was significant.
"I think we will look back at this announcement from Paypal as being a major turning point in the mainstream adoption both of Bitcoin and its payment system being taken seriously by businesses," he told the BBC.