RoomAlive is an augmented reality system that extends an Xbox gaming environment to an entire living room. Microsoft first demonstrated the technology with its IllumiRoom research project at the 2013 CES. RoomAlive is IllumiRoom version 2.0 and it combines Kinect and projectors linked to the Xbox to extend games from a TV screen to nearby walls, creating an augmented reality experience that is interactive inside a room. Gamers can reach out and hit objects within a game, or interact with games through any surfaces of a room. RoomAlive tracks the position of a gamer's head across all six Kinect sensors, to render content appropriately in real time. Similar virtual reality experiments have been introduced in the past, but Microsoft's RoomAlive can automatically detect the floors and walls of a room so it can work anywhere.

Although RoomAlive's video projectors and Kinect combination is too costly and large for the average living rooms at the present time, Microsoft anticipates the technology to evolve and become much smaller and low-cost. RoomAlive also makes it possible for future games to use real world and physical objects as part of the game.