The Rift headset will be released early next year. Until now, only a "developer" version had been sold.
The deal with Microsoft, the tech giant that makes the Xbox, means Oculus owners will be able to stream Xbox One games to the headset and see them as if they are being viewed on a huge "home cinema" screen.
The new headset will compete with rivals such as Sony's Morpheus and HTC's Vive.

Sandra Charles' spent 375 hours knitting 350 strands out of thousands of recycled label transfers
Ms Charles, of Somerset, got the idea while at a recycling centre.
Her work is on display with other students' projects at Nottingham Trent University, including lingerie inspired by wartime love letters, and two-dimensional clothing.
Ms Charles said: "I wanted to develop my sculpture work and my knitting. I looked at different techniques and saw arm knitting.
"It's very difficult to describe but basically uses your arms as needles. It took three hours to make each strand at first - I got repetitive strain injury at one point and couldn't do any more for a couple of days."
Other work includes Chloe Bampton, a fashion design student, who created lingerie inspired by her grandparents' war time love letters.
Ms Bampton, from Dullingham, Cambridgeshire, said: "When you read through their letters you imagine yourself in a different way of life completely.
"They are so romantic. We've lost touch with the era of hand letter writing and courting and I wanted to design lingerie which provided an alternative to the modern day shock element."
Her grandparents Dennis and Kathleen Algar married shortly before Mr Algar was sent to fight. He spent four years in a Japanese prisoner of war camp.
Meanwhile, South Korean student Dahye Jee designed concept clothing which appears two-dimensional, inspired by vintage paper dolls.
All the work is on display until 6 June.

Researchers suggest there is poor evidence to support screening and isolating infected patients - standard practice in hospitals worldwide.
But good hand hygiene and bathing with antibacterial solutions are key to reducing infections, they say.
Experts warn more studies are needed before any change in protocols.
Despite rates of Meticillin resistant staphylococcus aureus (MRSA) falling in many countries, concerns about its spread remain.
The bug is resistant to most antibiotics and while it is can be carried harmlessly on the skin it may lead to serious wound infections - particularly in people who are already unwell.
Hospitals have used a varied combination of methods to tackle it, including:
Scientists reviewed studies over the last decade.
But most investigated several infection control measures in combination, making it difficult to tease out which ones worked best.
Researchers say the limited evidence focusing solely on isolation or screening suggest they may not reduce spread of the disease and could do more harm than good.
Prof Gerd Fatkenheuer, from the University Hospital Cologne, Germany, who was part of the research team said: "In the haste to do something against the rising tide of MRSA infection, measures were adopted that seemed plausible but were not properly assessed, bundling the effective and harmless with the ineffective and harmful.
"We know for example that isolating patients can result in anxiety and depression and fewer visits by doctors and nurses."
The scientists emphasise evidence backs good hand-washing and suggests people with the bug should bathe daily using antibacterial solutions.
Prof Peter Collignon at the Canberra Hospital, Australia said: "Certain countries, however, that take all of these combined approaches - such as the Netherlands and Denmark - have the lowest rates of MRSA spread in healthcare facilities.
"So we need to make sure that studies clearly show that we will not do harm by stopping some or all of these isolation methods."
The report authors say as MRSA levels continue to drop this provides a good opportunity to reassess how best to tackle the problem.
And they recommend scarce resources could be redeployed to combat other infections - rather than singling out MRSA.
Recent figures for England suggest 862 cases of MRSA were recorded in the year 2013-14, a substantial reduction from the 4,451 cases reported in 2007-08.
Oculus Virtual Reality (VR) has revealed its new headset for customers, and revealed it will come with an Xbox One controller.
[NEXT_CONCEPT]
A student knitted almost 4,000 ft (1.2km) of waste material using her arms as needles for an art project.
[NEXT_CONCEPT]
The jury is still out on the effectiveness of methods to control the hospital superbug MRSA, according to an international report in the Lancet.