Rumoured last week, the BBC has announced the catch-up service will be rolled out to users starting today, and will be available to all by the end of the week.
It will be free for all Xbox Live users, making it the first UK entertainment app on the system that doesn't require an Xbox Live Gold subscription.
iPlayer's Xbox 360 app will feature the aesthetics seen on other platforms, along with Kinect gesture and voice control offered in other entertainment apps.
HD streaming will be available with supported programmes, and while BBC ID log-ins won't be available, searches and favourites made on the app will be automatically remembered for repeat use.
Programming from BBC One, BBC Two, BBC Three, BBC Four, BBC HD, BBC News, CBBC, CBeebies and BBC Parliament will be available.
"Xbox is hugely successful in the UK. Given the BBC's goal to reach its entire audience, I'm particularly excited that the BBC will be bringing iPlayer to all Xbox users at no extra cost as part of Xbox LIVE's free membership," said programmes and on-demand general manager Daniel Danker.
"As we continue our work to make BBC iPlayer as simple as possible, we're also excited to experiment with natural user interfaces made possible with Kinect, including voice and gesture control."
He added: "We believe it's early days for these experiences, but see a great future working with partners such as Microsoft on innovations like these."
Microsoft has been in ongoing discussions with the broadcaster for several years. The move ensures that iPlayer is now available on all major games consoles, including PlayStation 3 and Wii, as well as 450 other devices.
iPlayer saw a total of two billion requests in 2011, with one in four made through TV devices such as consoles.
Microsoft also revealed a three-fold increase in video consumption on Xbox 360 since its entertainment-oriented relaunch in November, while the BBC is "working" on a Windows Phone version.
> Read our interview with iPlayer boss Daniel Danker on mobile apps, Sky and standardisation
Watch a video of BBC iPlayer on Xbox 360 below: