The software giant had showcased the technology, which allows gamers to use their bodies and gestures as controllers, in the E3 trade expo last year.
However, there were rumours that Microsoft would be launching the Natal technology during the festival season of 2010, but Microsoft didn't officially confirm the date at that time.
The Xbox news was the focal point of Ballmer's keynote speech during the opening of Consumers Electronics Show (CES) in Las Vegas on Wednesday.
The president of the company’s entertainment and devices division, Robbie Bach hailed the technology as one of the most crucial developments in the gaming domain this year, as it offers an "entirely new but completely natural way" to enjoy gaming.
Extolling the technology, he said "We’re proud of the advances we’ve made that allow players to immerse themselves in games that feel real. But now we want to create an experience that’s more simple, more intuitive."
Microsoft will be pitting its Project Natal as an add-on to Xbox against motion-sensitive controller technology from Nintendo’s highly popular Wii gaming console.