The drive will go on sale in Japan on March 11 and will cost ¥15,540 (£108).
Its launch in Japan will mark the first time Microsoft has offered a 250GB drive add-on for the Xbox 360 as a stand-alone unit. The drive has been available overseas since late last year but only in a bundle with a new console.
Microsoft has no current plans to put it on sale as a stand-alone unit outside of Japan, said Kei Iwasaki, a Microsoft spokesman in Tokyo.
The new drive more than doubles storage capacity from the 120GB drive available on the current Xbox 360 Elite console. The drive is used to store downloaded software, TV shows, movies and other content from Microsoft's Xbox Live Marketplace online store.
Local storage on the console is becoming more important to Microsoft as it attempts to expand its online store and generate additional revenue from entertainment content.
Throughout 2009 the company continued to attract users to its Xbox Live service and ended the year with 29 million users, up 35 percent from the last day of 2008.
Rival Sony recently re-launched its PlayStation 3 console and includes a 120GB drive in each unit as it too works on expanding online sales of content such as movies and game downloads.