The Colloquis technology will be incorporated into Microsoft's customer support initiatives to create computer-based interactive customer services dubbed Windows Live Service Agents.
The system could allow telephone callers to describe problems in their own words, rather than having to wait for an operator or navigate a series of menus.
The user could report a specific problem, and the application could suggest a solution in real time.
The first of Windows Live Service Agent will be rolled out this Autumn as part of the Xbox 360 support programme.
Microsoft also said that Colloquis will be used to create conversation systems that use Windows Live Messenger to "entertain, encourage engagement with products or services, and drive search and information retrieval".
Colloquis also develops SmarterChild, a demonstration programme for AOL Instant Messenger which the company claims has had 'conversations' with over 15 million users.
The terms of the acquisition were not disclosed.
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