Lenovo, which bought IBM's personal computer business in 2005, is the world's fourth-biggest PC maker by shipments behind Hewlett-Packard, Dell and Acer.
The eBox, which can be connected to high-definition television sets and the Internet, is a controller-free console that can be operated by gestures, according to Lenovo.
Lenovo is China's biggest computer maker and has developed a prototype of the eBox console it has set up a new company called Beijing eedoo Technology Ltd. to produce and market it.
It will then be unveiled gradually in the Asia-Pacific region and other overseas markets, the company said.
The Lenovo console "targets the entertainment needs of 120 million Chinese urban households" and will be released by the end of this year in China, the company said.
The eBox would be the second in the world to operate with motion-sensor technology, with Microsoft due to launch its Kinect system for the XBox 360 on November 4.
Lenovo's foray into the video game sector is the company's latest move to diversify its business into new product types including smartphones and tablet computers.
No financial details about Lenovo's investment in the new product or the new company were disclosed.
At the 2010 Consumer Electronics Show in Las Vegas in January, Lenovo unveiled a hybrid personal computer called the IdeaPad U1 -- a laptop with a screen that could be detached and used as a separate tablet computer, media reports have said.
The company launched LePhone, its first signature mobile product, earlier this year.