According to the suit, the wiring that connected the Xbox 360 to an electrical outlet became so hot that it started a "catastrophic" fire at a house in Warsaw, Ill. The victim, an infant named Wade Kline, perished in the inferno.
"The fire was a direct and proximate result of the overheating of the game's power supply and wiring," claims the lawsuit, which was filed in state Circuit Court in Illinois. Microsoft, Wal-Mart, and an unnamed power-supply maker are named as defendants.
On Wednesday, Wal-Mart filed a procedural motion to move the case from state court to U.S. District Court in Illinois. The suit was originally filed in December 2006.
The lawsuit claims the fatal fire occurred in December 2004, even though the Xbox 360 didn't officially launch until May 2005 -- an indication that the unit involved may actually have been a first-generation Xbox console.
The suit was filed by Wade Kline's estate and seeks unspecified damages in excess of $50,000.
It's not the first time that the Xbox has been thought to have caused a dangerous fire. In 2005, a U.K. woman was pulled unconscious from a blaze reportedly sparked by an overheated Xbox system, according to the British online tech news site The Register.
In February 2005, Microsoft announced a recall of more than 14 million Xbox power cords, citing fire concerns.
"Microsoft recently learned about this tragic incident that occurred in December 2004," a Microsoft spokesman said in an e-mail. "Our sympathy is with the family. However, we are not aware of any evidence that an XBox caused the fire. Also, the complaint specifically states that an XBox 360 was involved, but this version of the product was unavailable for purchase at that time."