Xbox 360 also introduced Microsoft's Kinect motion-sensing game device. It was the company's primary gaming console, until it launched the Xbox One in 2013.
The company's Xbox Live network, which allows online multi-player gaming, will continue to be available for the Xbox 360.
"While we've had an amazing run, the realities of manufacturing a product over a decade old are starting to creep up on us," said Phil Spencer, the head of Microsoft's Xbox division.
However, many of the Xbox 360 games will "stay alive", as users can play many of them them on the Xbox One console.