The console brand will sponsor six episodes of a special Ibiza Rocks show on T4 and Channel 4, presented by BBC Radio 1 DJ Annie Mac.
Launching on July 30, the specially commissioned series will showcase a range of performances from the Balearic Island. The show will air every Sunday on the T4 strand throughout the summer, featuring acts such as Katy B, Chase & Status, Tinie Tempah and a headline performance from Plan B.
Xbox branding will appear alongside exclusive interview footage and backstage access, while the console's Kinect titles will feature in product placement and integrated titles.
An extended version of the Ibiza Rocks show, produced by JJ Stereo, will be broadcast on Channel 4's late night strand Music on 4.
Stephen McGill, the director of Xbox and Entertainment for Microsoft UK, said: "Ibiza Rocks is a long-standing sponsorship for Xbox and we are excited to be working in partnership with Channel 4 to help bring a little piece of Ibiza to T4 viewers in the UK.
"This is a great fit for Xbox 360 and demonstrates another example of adding value to traditional TV sponsorships by providing viewers with exclusive content and the Xbox brand with unique product placement opportunities."
Shane Murray, Ibiza Rocks promoter, added: "We are delighted to be able to bring Ibiza Rocks back to the UK and particularly pleased that it will be shown on T4 for the first time.
"We've got an amazing, diverse lineup and with her finger well and truly on the pulse, Annie Mac is perfectly placed as host. This is natural extension to our ongoing partnership with Xbox - driven by exciting content and talent access."
In March, Sky agreed its first product placement deal when Xbox Kinect game Kinect Sports appeared on Sky1 sports panel show A League Of Their Own.
Watch Plan B perform 'She Said' at Glastonbury 2011 below: