Bloggers who enter such words or other politically charged or pornographic content are prompted with a message that reads: "This item should not contain forbidden speech such as profanity. Please enter a different word for this item".
Officials at Microsoft's Beijing offices refused to comment.
Internet sites in China are strongly urged to abide by a code of conduct and self-censor any information that could be viewed by the government as politically sensitive, pornographic or illegal.
For many Chinese websites, such content also includes news stories that the government considers unfavorable or does not want published.
New regulations issued in March now require that all China-based websites be formally registered with the government by the end of June or be shut down by Internet police.
Microsoft formed its portal joint venture with China's state-funded Shanghai Alliance Investment Ltd (SAIL) last month to launch the MSN China web portal.
Microsoft is not the only international tech company to comply with China's stringent Internet rules.
Yahoo! and Google -- the two most popular Internet search engines -- have already been criticized for cooperating with the Chinese government to censor the Internet.
The Paris-based Reporters Without Borders (RSF) earlier said it "deplores the irresponsible policies of United States Internet firms Yahoo! and Google in bowing directly and indirectly to Chinese government demands for censorship".
It has called on the United States to apply the principles of its Global Internet Freedom Act on its private sector's activities in "some of the world's most repressive regimes".
The Global Internet Freedom Act, passed by the US House of Representatives in July 2003, aims to combat online censorship imposed by governments around the world.
In their efforts to conquer the Chinese market, Yahoo! and Google are "making compromises that directly threaten freedom of expression," RSF has said.