"Xbox 360 is now mass market in Europe," Chris Lewis, vice president of Microsoft's interactive entertainment business in Europe, said in a statement.
The reductions come as Sony's PlayStation 3 appears set to capitalize on the company's recent victory in the high-definition DVD battle and on a slew of highly anticipated new games hitting the market this year.
This was the second price cut for the Xbox in Europe in less than a year. Last August, Microsoft shaved 7 percent off the euro price of its low-end model and 13 percent off the main Premium model.
The PlayStation brand has long dominated the European console market, although the PS3 has struggled to win fans due to its high price and lack of must-have games.
Last October, in an effort to kick-start sales, Sony introduced a cheaper PS3 model in Europe for 400 euros and cut prices on a high-end version to 500 euros.