The company is reportedly trialling free anti-virus software internally and said the beta version would be released "soon".
Called Morro, the software will tackle viruses but lack the broader range of utilities, such as parental locks, found in paid-for security suites.
Morro will be Microsoft's second venture in the highly competitive security market.
Microsoft's first attempt revolved around the Windows Live OneCare service that did not succeed in turning many customers away from rivals such as Symantec and McAfee.
Microsoft plans to discontinue Live OneCare once the Morro software is ready.
No specific date has been given for when Morro will be released, but in the past Microsoft has said it would be out by the end of 2009 at the latest.
Microsoft said Morro would tackle viruses, spyware, rootkits and trojans.
Janice Chaffin, Symantec's president of consumer products, said customers wanted more than just basic protection.
"A full internet security suite is what consumers require today to stay fully protected," she said.
Security software for home PCs typically cost around £30-40 and often allow users to install protections on more than one computer.
Other companies, such as AVG and Alwil already produce and distribute free anti-virus products. Read more at BBC
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