The Independent Television Commission has slammed the ad as "shocking" and banned the commercial from U.K. television.
The ad begins with a newborn child flying through a window before aging decades in seconds--then crashing and screaming into a grave as an elderly man. It was designed to illustrate the phrase: "Life is short. Play more."
The ITC, which has the power to ban ads that it considers unsuitable to be shown onscreen, said it received 136 complaints about the Xbox ad.
The Guardian Unlimited Web site reports that the ITC has also expressed its displeasure to the Broadcast Advertising Clearance Center, which had approved the Xbox ad.
In its ruling, published this week, the ITC said that "the man's screams throughout his life's journey suggested a traumatic experience, which, together with the reminder that life is short, made the final scene more shocking."
Microsoft issued a statement in response to the ITC's ruling, apologizing to anyone who was offended or upset by the ad.
The company is expected to continue showing the ad in cinemas, however, which are not regulated by the ITC.
The ad can be viewed on the Playmore.com Web site, which includes a warning about its "potentially shocking and disturbing nature."
ZDNet UK's Graeme Wearden reported from London.