Buffet, ranked by Forbes as the richest person in the world in February this year, is to buy $5bn (£2.7bn) of preferred stock from Goldman Sachs via his company Berkshire Hathaway in a private placing.
Goldman Sachs is also raising a minimum of $2.5bn through other investors in a public offering.
Lloyd Blankfein, chairman and chief executive of Goldman Sachs, says: “We are pleased that given our longstanding relationship Warren Buffett has decided to make such a significant investment in Goldman Sachs.
“We view it as a strong validation of our client franchise and future prospects.
“This investment will further bolster our strong capitalization and liquidity position.”
Warren Buffett, chairman and chief executive of Berkshire Hathaway, says: “Goldman Sachs is an exceptional institution. It has an unrivalled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance.”