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The New Xbox Experience (NXE) dashboard update will launch with a title that utilises gamers' created Avartars.
A Kingdom For Keflings will launch alongside the dashboard update on November 19 at a cost of 800 Microsoft points.
The game, which is developed by NinjaBee, allows users to take control of their created Avatars as they overlook the building of a city.
"We wanted to make a city building game where the player is more personally involved instead of controlling an abstract floating hand," said NinjaBee president Steve Taylor.
The Avatar idea is similar to that of Nintendo's Miis and is one of a number of new features that will come with the NXE update.
