The European price of the entry-level model Xbox 360 Core, which does not include a hard drive, will be cut by 20 euros to 279.99 euros, Microsoft said.
Earlier this month, Microsoft announced a price cut by about 13 percent for its main Xbox 360 model in the United States, hoping to boost sales ahead of the crucial holiday season.
Microsoft reduced the U.S. price of the Xbox 360 Premium model by $50 to $350. Sony Corp had previously cut the price of its PlayStation 3 machine by 17 percent to $500.
Faced with unexpectedly strong competition from Nintendo's cheaper Wii console, Microsoft is aiming at expanding the appeal of the Xbox 360 to an audience outside its core fan base of young men.
By the end of June, Microsoft had sold 5.6 million Xbox 360s in the United States, compared with 2.8 million Wiis and 1.4 million PS3s -- the latter two launched a year later.