The software giant, which bought Skype for $8.5bn (£5.3bn) in May 2011, said Windows Live Messenger (WLM) would be turned off by March 2013, although it would remain available in China.
The move comes as Microsoft re-focuses its efforts on the software communications developer.
WLM, originally called MSN Messenger, was launched in 1999. Since then, photo messaging, video calls and games have been added to the basic text messaging package.
In a post on his Skype blog, Tony Bates, president of the Skype Division at Microsoft, wrote: "Skype and Messenger are coming together. We will retire Messenger in all countries worldwide in the first quarter of 2013 (with the exception of mainland China where Messenger will continue to be available)."
According to Tech Crunch , user numbers have been dwindling over the years.
In 2010, it had 300 million users, falling to 100 million currently, the website reported Microsoft as confirming. Meanwhile, Skype has reached 280 million users, according to Microsoft’s latest earnings report.
News of the changes was confirmed by Skype on Twitter, saying: "Messenger and Skype are coming together as one. Update to Skype and your Messenger contacts will be there."
Mr Bates wrote in his blog: "Millions of Messenger users will be able to reach their Messenger friends on Skype. By updating to Skype, Messenger users can instant message and video call their Messenger friends.
"This effort started with the release of Skype 6.0 for Mac and Windows a few weeks ago, which allows you to sign into Skype using a Microsoft account. Now Messenger users just need to update to the latest version of Skype, sign in using a Microsoft account, and their Messenger contacts will be there."
The statement promised Messenger users who update to Skype the following features:
:: Broader device support for all platforms, including iPad and Android tablets.
:: Instant messaging, video calling, and calling landlines and mobiles all in one place.
:: Sharing screens.
:: Video calling on mobile phones.
:: Video calling with Facebook friends.
:: Group video calling.
Mr Bates added the changeover would be carried out over the next few months, and offered "information and help along the way".