The cuts represent around 8% of the overall Microsoft Gaming division and will mostly happen at Activision Blizzard, the report said, citing an internal memo from the head of the company's gaming division, Phil Spencer.
Microsoft did not immediately respond to a Reuters request for comment.
Blizzard President Mike Ybarra and Chief Design Officer Allen Adham are also leaving the company, while a previously announced survival game by Blizzard has been canceled, the report said.
The news comes months after Microsoft closed its $69 billion deal for Activision Blizzard, boosting its heft in the videogaming market with best-selling titles including "Call of Duty" to better compete with industry leader Sony.
Several other big firms including Alphabet (GOOGL.O), Amazon.com (AMZN.O) and ebay (EBAY.O) have also laid off thousands of staff in recent weeks to lower costs and boost profitability.
Overall, more than 21,000 workers have been let go across 76 tech firms in January, according to tracking website Layoffs.fyi.
The tech sector shed 168,032 jobs in 2023 and accounted for the highest number of layoffs across industries, according to a report by Challenger, Gray and Christmas earlier this month. That included more than 10,000 cuts at Microsoft.
Analysts and industry experts have said they expect fewer layoffs this year, with firms that are racing to catch up in the AI space more likely to downsize to offset the billions of dollars they are spending on the technology.
