Project Natal was first announced on June 1, 2009 at E3 2009. Microsoft said that over a thousand software development kits began shipping to game developers that same day.^[2] It is scheduled to be released in time for Christmas 2010(Natal itself means Christmas in Portuguese).^[3]. Reports say that it will be released in October 2010^[4] Official pricing has not been announced yet.

It is rumored that the launch of Natal will be accompanied with the release of a new Xbox 360 console (as either a new retail configuration,^[5][6] a significant design revision,^[7]) Microsoft has dismissed the reports in public, and has repeatedly emphasized that it will be fully compatible with all Xbox 360 consoles. Microsoft indicates that it considers it to be a significant initiative, as fundamental to the Xbox brand as Xbox Live,^[8] and with a launch akin to that of a new Xbox console platform.^[9] Project Natal has even been referred to as a "new Xbox" by Microsoft chief executive officer Steve Ballmer at a speech for the Executives' Club of Chicago.^[10][11] When asked if the introduction will extend the time before the next-generation console platform is launched (historically about 5 years between platforms),^[12] Microsoft corporate vice president Shane Kim reaffirmed that the company believes that the life cycle of the Xbox 360 will last through 2015 (10 years).^[8]

Natal differs from any other technology on the market,^[13] the software technology enables advanced gesture recognition, facial recognition, and voice recognition.^[14] The skeletal mapping technology shown at E3 2009 was capable of simultaneously tracking up to four users for motion analysis,^{[8][15][14][16]} with a feature extraction of 48 skeletal points on a human body at a frame rate of 30 hertz.^[17][16] Depending on the person's distance from the sensor, Project Natal is capable of tracking models that can identify individual fingers.^[15][14]

According to a supposed instruction manual, the sensor contains a 'motorized tilt mechanism' and requires plugging into the mains.^[18]