The original Xbox was released on November 15, 2001, in North America, February 22, 2002, in Japan, and March 14, 2002, in Australia and Europe. It was Microsoft's first foray into the gaming console market. As part of the sixth-generation of gaming, the Xbox competed with Sony's PlayStation 2, Sega's Dreamcast (which stopped American sales before the Xbox went on sale), and Nintendo's GameCube. The Xbox was the first console offered by an American company after the Atari Jaguar stopped sales in 1996. The name Xbox was derived from a contraction of DirectX Box, a reference to Microsoft's graphics API, DirectX.

The integrated Xbox Live service launched in November 2002 allowed players to play games online with or without a broadband connection. It first competed with Dreamcast's online service but later primarily competed with PlayStation 2's online service

Xbox Live required a subscription, as well as broadband-only connection which was not completely adopted yet, Xbox Live was a success due to better servers, features such as a buddy list, and milestone titles like Halo 2 released in November 2004, which is the best-selling Xbox video game and was by far the most popular online game for the system.

The Xbox 360 was officially unveiled on MTV on May 12, 2005, with detailed launch and game information divulged later that month at the Electronic Entertainment Expo (E3). The console sold out completely upon release in all regions except in Japan. Several retail configurations of the core Xbox 360 model were offered over its lifetime, varying the amount of RAM and internal storage offered.

The Xbox 360 was released as the successor of the original Xbox in November 2005, competing with Sony's PlayStation 3 and Nintendo's Wii as part of the seventh generation of video game consoles.

Two major revisions of the Xbox 360 were released following the initial launch. The Xbox 360 S (typically considered as "Slim"), launched in 2010, featured the same core hardware but with a redesigned, slimmer form factor with a smaller-sized 250 GB hard drive. It also added integrated 802.11 b/g/n Wi-Fi, TOSLINK S/PDIF optical audio output, five USB 2.0 ports (compared to the three from older versions) and special port designed for the Kinect peripheral. The Xbox 360 S replaced the base Xbox 360 unit, which was discontinued, and sold at the same price.

A cheaper Xbox 360 S unit, removing the 250 GB drive while adding 4 GB of the internal store, was released later in 2010; the unit allowed users to hook up an external storage solution or purchase a 250 GB internal add-on.

Kinect (stylized as KINECT) is a motion-sensing input device by Microsoft for the Xbox 360 video game console and Windows PCs. Based around a webcam-style add-on peripheral for the Xbox 360 console, it enables users to control and interact with the Xbox 360 without the need to touch a game controller, through a natural user interface using gestures and spoken commands. The project is aimed at broadening the Xbox 360's audience beyond its typical gamer base. Kinect competes with the Wii Remote Plus and PlayStation Move with PlayStation Eye motion controllers for the Wii and PlayStation 3 home consoles, respectively. Kinect was launched in North America on November 4, 2010, in Europe on November 10, 2010.

Xbox SmartGlass released on October 26, 2012, by Microsoft.

Announced on May 21, 2013, the Xbox One has an emphasis on internet-based features, including the ability to record and stream gameplay, and the ability to integrate with a set-top box to watch cable or satellite TV through the console with an enhanced guide interface and Kinect-based voice control.

As of June 30, 2013, 78.2 million Xbox 360 consoles have been sold worldwide.

The Xbox One was released on November 22, 2013, in North America, as the successor of the Xbox 360. The Xbox One competes with Sony's PlayStation 4 and Nintendo's Wii U and Switch as part of the eighth generation of video game consoles.

On June 13, 2016, Microsoft announced the Xbox One S at E3 2016, which featured a smaller form factor, as well as support for 4K video (including streaming and Ultra HD Blu-ray) and HDR.

Xbox Game Pass is a subscription service from Microsoft for use with its Xbox One and Windows 10. Described as "Netflix for video games", the Xbox Game Pass grants users access to a catalog of games from a range of publishers for a single monthly subscription price. The service was launched on June 1, 2017.

At E3 2017, Microsoft unveiled Xbox One X, a high-end model with improved hardware designed to facilitate the playing of games at 4K resolution.

In 2019, Microsoft released a content filtering to stop swearing and toxicity in online gaming. The service enables players to report messages, Gamertags, photos, and any other toxic content on its platform.

During The Game Awards 2019, Microsoft officially unveiled Xbox Series X—a new Xbox model to be released in late-2020. The console is estimated to be four times as powerful as Xbox One X, with support for 8K resolution, real-time ray-tracing, and 120 frames-per-second renderings. Xbox Series X is stated to be backward compatible with all games and accessories currently compatible with Xbox One (including original Xbox and Xbox 360 titles that are supported on Xbox One). In addition, there are no immediate plans for first-party games to be exclusive to the new console over the Xbox One. Following the unveiling, a Microsoft spokesperson stated that Xbox Series X constituted an entry in a fourth generation of Xbox hardware, which will be branded simply as "Xbox" with no subtitle. Prior to the E3 reveal, it had been speculated that Microsoft was developing two next-generation Xbox consoles codenamed "Anaconda" and "Lockhart", which were high-end and low-end models respectively. Microsoft has focused solely on a high-end product in its current marketing.