Microsoft Israel R&D is one of four regional development centers. The others are located in the U.S., India and China. The center is led by corporate vice president Moshe Lichtman and works on telecom, security, internet, online services and entertainment.

The Israel R&D center also serves as an anchor to the venture capital sector and the startup community, facilitating technology and business cooperation between the industry and Microsoft's product groups. In March 2008 Microsoft opened its only "innovation lab" outside the U.S., as a part of its Israeli R&D center. The labs combine academic research and commercially oriented R&D, aimed at 3 to 5 years ahead, with the mandate to develop technologies in the areas of online search, advertising and smart navigation, alongside entertainment services and technologies in emerging sectors.