The company said the upgrade will be available for free in the Windows Store, allowing users to update when and if they choose, ABC News reported Tuesday.
Released last October, Windows 8 presented users with a learning curve that frustrated many who bemoaned the loss of the traditional Start Button, replaced by a Start Screen that includes tiles or apps.
Many tech watchers say they expect Microsoft will resurrect the Start button in Windows 8.1, ABC News said.
"We have heard the feedback on that, and it's one of many pieces of feedback we have listened to with an open mind," Microsoft's chief financial officer to Windows, Tami Reller, said of the Start Button issue.
Releasing a significant upgrade less than a year after Windows 8 was launched suggests Microsoft had hoped for better results with the original, one analyst said.
"By making the Windows 8.1 upgrade free, Microsoft is indicating they weren't satisfied with the experience," Patrick Moorhead, an analyst at Moor Insights & Strategy, told ABC News.
"This is a very good step toward improving the somewhat negative sentiment about Windows 8 as a whole."