The Washington-based tech giant has announced that it will be purchasing and expanding real estate that it has been leasing for the past 15 years in Google's Mountain View backyard.
The plan is to significantly redesign the five-building facility, which should be able to accommodate an additional 500 to 1000 employees.
Microsoft currently has around 2000 working out of a variety of Bay Area locations, where it has had a presence since 1981.
Microsoft's area teams work on projects that include Xbox, Outlook, Skype and Yammer.
An artist's rendering of the new campus released by the company shows a leafy compound complete with an expansive central courtyard and at least one living roof.
The company still has go through Mountain View's permitting process, and construction isn't likely to begin before 2017 and will take three years to complete, says Microsoft spokesperson Emily Horn.
It's hard not to read a significant amount of symbolism into Microsoft's real estate news.
In the fall of 2014, the company laid off 160 Bay Area-based employees as part of larger cuts to its workforce related the company's broader restructuring.
But guided by chief executive Satya Nadella, who took the reins in February 2014, Microsoft has made a remarkable turnaround from its reclusive roots as a software sales giant toward being a mobile- and cloud-first company that has embraced partnerships with Silicon Valley companies such as Box and Salesforce.
Building out its presence in Silicon Valley also will help Microsoft compete for engineering talent that may not want to relocate to the Pacific Northwest.
The war for tech talent has been heating up as a result of demand not only from existing tech juggernauts and start-ups, but also from the growing number of automakers -- including Ford and Toyota -- that are expanding their outposts in this tech hot-house as they race to develop autonomous cars.
Microsoft is hardly the only tech company planning to build flagship facilities in Silicon Valley.
Facebook employees last year moved into a new site designed by Frank Gehry, while Google is making plans to build a new mini-city near its current Googleplex.
But Apple's futuristic vision takes the cake: the cash-rich company has been busy building a new oval circular headquarters not far from near its current Cupertino location.