Hotmail, Office 365 and Skydrive were among the services affected.
Microsoft was still analysing the cause of the problem on Friday morning, but said it appeared to be related to the internet's DNS address system.
Such a major failure is likely to raise questions about the reliability of cloud computing versus local storage.
Especially embarrassing is the temporary loss of Office 365, the company's alternative to Google's suite of online apps.
The service also went offline briefly in mid-August, less than two months after it launched.
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