That feature will come with a system update this fall, although beyond that scant few details were revealed.
At the event, Microsoft said that live TV on Xbox 360 will include news and entertainment programming, and even though the company didn't reveal any networks that had signed up for the service, we caught an ABC logo on one of the screenshots.
Microsoft has been working to expand the breadth of content on the Xbox 360. It was the first console to offer a Netflix app to allow subscribers to watch TV shows and movies as long as they paid the additional Xbox Live Gold membership fee.
Additionally, there are hundreds of TV shows and movies available on a pay-per-view basis through the Xbox 360's dedicsated video delivery service.
But Microsoft has been even more pro-active than that. We learned earlier this year that Conan O'Brien was approached by Microsoft after he was canned from late-night TV, with the potential of doing a show filmed and broadcasted exclusively for the 360.
And this week, the Xbox 360 made history by being the first console to simulcast a live TV program - Spike TV's coverage of the E3 show.
So it seems like a natural progression that the Xbox 360 will actually be able to play a whole slew of live TV content down the road. What remains a mystery is how it convinced the networks to sign on, given how married they all are to the traditional cable and satellite operators.
The fact that Microsoft didn't expose too many details makes us think there are some footnotes to be added - for example, the service may require users to have an active cable or satellite subscription in order to use the 360's live TV feature.
Those details will come in time, but for now, it's pretty big news that Microsoft managed to score such a big deal.