Beginning on November 2 and continuing through the end of this year, the price of Xbox One consoles will be cut $50 at US retail outlets, according to Microsoft.
In what amounts to the second price reduction since the new-generation consoles were launched a year ago, Xbox One will be available starting at $349.
"We're offering our best price yet," Microsoft corporate vice president Yusuf Mehdi said in a blog post.
"We're gearing up for one of our biggest holidays ever."
PS4 hit the market at a price lower than Xbox One, but the holiday-season reduction makes the Microsoft console a more affordable option for buyers.
The cut eats into potential for Microsoft to make profit on the hardware but could help bolster ranks of users who wind up paying for the US company's games and Xbox Live online service for play and digital content.
Microsoft in June began selling a reduced-price version of its Xbox One without the Kinect motion detection system.
The Xbox One without Kinect was sold for $399, the same price as the PS4, but will begin selling $50 less in the US next week.