The price decreases come just a year after Vista's launch, and will help resellers move Vista stock not pre-loaded with the forthcoming service pack.
Microsoft also hopes that the price decreases will be offset by vastly increased sales for the retail software, although boxed versions of the operating system make up about 10% of Vista sales, with most users buying a new PC with the software preloaded.
The international price cuts - which have not been confirmed for the UK market - cover upgrades to more fully featured versions of Vista too. Only prices cuts in the US have so far been reported.
Reuters reports that Microsoft will cut the price of Windows Vista Ultimate - the most expensive and feature-rich version of the operating system - from the US equivalent of £200 to £160. The upgrade price will fall from £130 to £110.
The upgrade version of Vista Home Premium will fall from the US equivalent of £120 to £65, says Reuters.