Computers with Windows XP Media Center will come with a remote control, as well as the more traditional mouse and keyboard.
The software will not be available as a separate operating system. Instead, it will be packaged together with personal computers specially designed to deliver its key media features.
The release is part of Microsoft's strategy to transform desktop computers into the digital entertainment centre of the home.
Teen spirit
The software giant said Windows XP Media Center, formerly codenamed Freestyle, was aimed at "digital media enthusiasts, college dorm rooms and teen bedrooms."
A Microsoft spokesman said young people accustomed to listening to music and watching video on computers were more likely to appreciate having their e-mail, internet access and digital entertainment in a complete package.
Windows XP Media Center will come with a new mid-range computer costing between $1,000 to $2,000.
As well as playing CDs or DVDs, you will be able to watch TV and record shows on to the computer's hard drive.
Focus on the home
The new PCs are expected to go on sale in United States, Canada and South Korea in about four months.
They will come with their own remote control. It will feature a Start button which brings up a screen to replace the standard Windows graphics with a simple design that provides quick access to various entertainment media and functions.
Windows XP Media Center is one of a range of consumer-oriented products that Microsoft is preparing to release in order to move into the living room.
Later this year, it will roll out a separate advanced media player for existing Windows users, a Tablet PC for mobile pen-based computing and Mira, a wireless monitor that can be detached and used away from the desk to access the computer.