But Microsoft's president and chief executive, Steve Ballmer, insisted they had not been able to tamper with any of the company's key programs.
He said: "It is clear that hackers did see some of our source code.
"I can assure you that we know there has been no compromise of the integrity of the source code; that it has not been modified or tampered with in any way."
Serious consequences
Microsoft's abuse of its near monopoly and refusal to share its source code have been at the centre of a long-running and bitter legal battle with the US authorities.
But more than this, if the hackers were able to tamper with the code, and Microsoft did not discover the changes, there could be problems for customers who might buy any affected products.
Earlier, Microsoft had been tight-lipped: "We recently became aware of a hack to our corporate network.
"Microsoft is moving aggressively to isolate the problem and ensure the security of our internal network."
Russian connection
While the firm's reluctance to say much is understandable, more details of the attack have been reported in New York's Wall Street Journal.
It says the security breach was discovered by staff on Wednesday. They detected internal passwords being sent remotely to an e-mail account in St Petersburg in Russia.
Electronic logs apparently showed that the passwords were being used to transfer source code.
Computer security experts say the hackers appear to have used a virus called Qaz to break into Microsoft's network.
They say Qaz first surfaced in China in July and is a "worm" virus, which makes copies of itself to spread throughout a network.
Secrets
Once installed, the Qaz program allows hackers unauthorised access to the network by, for example, relaying back to them passwords and other secret information.
It is also believed that the virus entered Microsoft's system within an inconspicuous-looking e-mail and, once inside, began replicating.
This kind of virus is known as a Trojan, after the Trojan Horse of Greek mythology, which was used to end the siege of Troy.
Astonishingly, the hackers are believed to have had access to Microsoft's network for three months before the breach was detected.
Microsoft says it has referred the attack to the US Federal Bureau of Investigation (FBI) and is working with the authorities to "protect its intellectual property".