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The title will be based on a company franchise, though no additional details were made available.
Project Natal, a new control peripheral for the Xbox 360, utilizes a camera to perform three-dimensional tracking, facial recognition and voice recognition.
The hardware itself is a slender bar that will sit near a television to detect player movement and sound.
Menu navigation demonstrations included facial recognition to auto-login to Xbox Live and waving through menu screens.
Game demonstrations include Ricochet to punch and kick balls away from the screen, and Paint Party to splash paint onto a virtual canvas.
Microsoft this month said Project Natal will be available by holiday 2010.
Microsoft plans to offer Project Natal controls to compete with Nintendo Co.'s Wii, which has sold 50 million units worldwide due to its low barrier-to-entry, motion-sensitive controller.
Rival Sony Corp. will enter the motion-sensitive control market with the Playstation Motion Controller for the Playstation 3. The wand-like device is scheduled to be sold in spring 2010.
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