Liberty Media will also get two seats on the company's board of directors, which is being expanded to 11 members. It has nominated Greg Maffei, its president and CEO, and Mark Carleton, a senior vice president at the media company, to take the seats on Barnes & Noble's board.
The investment is another boost for New York-based Barnes & Noble, which recently lost a major competitor with rival Borders Group going out of business.
Barnes & Noble had put itself up for sale last year in response to pressure from billionaire activist shareholder Ron Burkle, but the company didn't strike a deal. Burkle has since significantly trimmed his Barnes & Noble stake.
Barnes & Noble has struggled along with other traditional book sellers facing heightened competition from online retailers such as Amazon.com and discounters such as Wal-Mart Stores Inc.
Leonard Riggio, chairman of Barnes & Noble, said the capital injection from Liberty Media will go toward expanding the company's digital business.
Maffei said Liberty Media is "excited about Barnes & Noble's prospects as the leading bookseller in the U.S. and its growth opportunities in the digital world."
Malone's Liberty Media empire operates three publicly traded companies - Liberty Interactive Inc., Liberty Starz Group and Liberty Capital Group - through which it runs home-shopping network QVC, based in West Chester, Pa., and movie channel Starz. It also holds stakes in online, media and communications companies.
Some industry analysts have speculated that QVC could be used as a marketing vehicle for Barnes & Noble's Nook. The company's reader also has the potential to go beyond books to deliver all types of digital products, including music, magazines, TV shows and movies. That makes it a competitor not just to Amazon.com's Kindle but also to Apple Inc.'s iPad.
On a day of generally unsettled market trading, Barnes & Noble shares were down almost 18 percent ($2.15) to $9.94 in afternoon trading.
Shares in Liberty Media, which is based in Englewood, Colo., were down 2.50 percent ($1.69) to $65.96.