More than one billion images will be transferred over to the the firm following the completion of the deal, which is said to be worth around $23.8 million (£14.7m).
"We are absolutely committed to making this transition as smooth and easy as possible," said Kodak Gallery general manager Victor Cho.
Kodak Gallery, launched in 1999, offers online photo sharing, Kodak prints and photo gifts from consumer digital photos. Shutterfly placed a stalking horse bid on the service in March following its parent company's bankruptcy.
Kodak bowed out of the digital camera market in February to shift its focus towards photo printing, desktop inkjet printers and other markets. It has sold off several off its assets to ease its financial woes.
Users' images will be transferred over to Shutterfly on July 2, unless they opt out of the service.