The moves came as the firm, a key tech lender, was scrambling to raise money to plug a loss from the sale of assets affected by higher interest rates.
BBC reports its troubles prompted a rush of customer withdrawals and sparked fears about the state of the banking sector.
Officials said they acted to "protect insured depositors".
Silicon Valley Bank faced "inadequate liquidity and insolvency", banking regulators in California, where the firm has its headquarters, said as they announced the takeover.
The Federal Deposit Insurance Corporation (FDIC), which typically protects deposits up to $250,000, said it had taken charge of the roughly US$175 billion (NZ$285b) in deposits held at the bank, the 16th largest in the US.
Bank offices would reopen and clients with insured deposits would have access to funds "no later than Monday morning", it said, adding that money raised from selling the bank's assets would go to uninsured depositors.
With many of the firm's customers in that position, the situation has left many companies with money tied up at the bank worried about their future.
"I'm on my way to the branch to find my money right now. Tried to transfer it out yesterday didn't work. You know those moments where you might be really screwed but you're not sure? This is one of those moments," one start-up founder told the BBC.
Another founder of a healthcare start-up said: "Literally three days ago, we just hit a million dollars in our bank account... And then this happens."
He managed to get the money wired to a different account 40 minutes before the deadline. "It was pending. And then this morning, it was there. But I know other people who did the same thing minutes after me, and it's not transferred."
"It was a crazy situation," he said.
The collapse came after SVB said it was trying to raise US$2.25b to plug a loss caused by the sale of assets, mainly US government bonds, which had been affected by higher interest rates.
The news caused investors and customers to flee the bank. Shares saw their biggest one-day drop on record on Thursday, plunging more than 60 percent and fell further in after-hours sales before trading was halted.
Concerns that other banks could face similar problems led to widespread selling of bank shares globally on Thursday and early Friday local time.
Speaking in Washington on Friday, US Treasury Secretary Janet Yellen said she was monitoring "recent developments" at Silicon Valley Bank and others "very carefully".
SVB did not respond to a request for comment.
A crucial lender for early-stage businesses, the company is the banking partner for nearly half of US venture-backed technology and healthcare companies that listed on stock markets last year.
The firm, which started as a California bank in 1983, expanded rapidly over the last decade. It now employs more than 8500 people globally, though most of its operations are in the US.
It has tried to assure customers of its stability in recent days.
On Friday, its UK subsidiary said it was independent, with a separate balance sheet that is "ring-fenced from the parent and its other subsidiaries".
"We appreciate that this is a concerning time for our clients so we are working tirelessly to support them and give more context," said its EMEA boss Erin Platts.
As well as being a major blow to the tech industry, the collapse of SVB has raised concerns about the wider risks facing banks, as rapid increases in interest rates hit bond markets.
Central banks around the world - including the US Federal Reserve and the Bank of England - have sharply raised borrowing costs over the last year as they try to curb inflation.
But as rates rise, the value of existing bond portfolios typically declines.
Those falls mean many banks are sitting on significant potential losses - though the change in value would not typically be a problem unless other pressures force the firms to sell the holdings.
Shares in some major US banks recovered on Friday, but the sell-off continued to hit some smaller firms.
Alexander Yokum, equity research analyst at CFRA, said banks that specialise in single industries are seen as vulnerable to rapid withdrawals, like the one that hit SVB.
"Silicon Valley Bank would not have lost money if they hadn't run out of cash to give back to their customers," he said. "The issue was that people wanted money and they didn't have it - they had it invested and those investments were down."
"I know there's a lot of fear, but it's definitely company-specific," he said.