The US$50 reduction is effective immediately in the US, Canada, Australia and New Zealand.
The new price still qualifies users for five free HD-DVDs when they purchase the Xbox accessory or any Toshiba HD-DVD player or HD-DVD enabled Toshiba notebook.
A Microsoft spokesman told vnunet.com that there are "no announcements to-date of the price drop coming to the UK or Europe".
Some commentators view the price cut as a desperate move by Microsoft to revive the HD-DVD brand, following moves by producers and retailers to side with the rival Blu-ray format.
Microsoft cuts Xbox HD-DVD add-on price
Microsoft has slashed the price of its HD-DVD drive accessory for the Xbox 360 console from US$179.99 to US$129.99..
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