The deal took three years to be agreed after Microsoft initially tried to limit it to its paying subscribers.
The iPlayer, launched in 2007, is credited with kickstarting catch-up TV.
Xbox 360 users with Kinect will be able to control the iPlayer using hand gestures and voice recognition.
TV move Dave Price, head of BBC iPlayer, said the move represented another stage in the platform's move from PC to TV."In 2011 we saw huge growth for BBC iPlayer on connected TVs - either through smart TVs, operator platforms or hooking up games consoles," he said in his blog.
According to the BBC, the iPlayer was viewed 433 million times on TV devices in 2011, which represents one in four requests. Mr Price estimates that by 2015, more than 50% of requests will be via TV devices, with gaming consoles an important part of that.
"We know the majority of games consoles are in the living room and connected to the TV... with the launch of BBC iPlayer on Xbox, we're excited to be unlocking a new audience... I can tell you the fight is already happening in my home for control of the Xbox! And my wife has never been interested in Call of Duty," he wrote.
Stephen McGill, director of Xbox and entertainment for Microsoft, said gaining iPlayer took its Xbox Live platform "to the next level".
It already carries content from Channel 4, Channel 5, Netflix, Love Film and Sky.
Sky nextThe next announced platform for iPlayer is Sky's Anytime+ service. Sky has said that it will add the catch-up facility before the end of the year, but has not given a specific date.
Meanwhile, Microsoft has confirmed that it will not unveil details of the successor to the Xbox 360 in June.
Some gaming rumour sites had suggested that the firm would provide details of the upgrade at the E3 Expo in Los Angeles. Its rival Nintendo has already said it will show off its forthcoming Wii U at the gaming conference.
But Microsoft said it would not be discussing new hardware, and would instead focus on games, music and other entertainment for its current console.
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