"Xbox 360 Hardware Engineering teams developed the 'Project Natal' sensor based on the PrimeSensor reference design to support the special requirements of Project Natal," said Aviad Maizels, PrimeSense president and founder.
What we don't know at the moment is just how much Microsoft's baby relies on PrimeSense. As you can see in the video after the jump (which had to have been directed by Tommy Wiseau) and in Engadget's demonstration, the company's focus has been on gesture control for UI navigation, so it's possible PrimeSense could just be supplying a way for users to interact with the Xbox Dashboard and Guide with motion commands. We'll let you know what we can find out.
Update: Microsoft's product manager for Xbox 360 and Xbox Live, Aaron Greenberg, dropped us a line to further explain the Microsoft-PrimeSense partnership where Project Natal is concerned. "Regarding your question, this was primarily a hardware partner announce," Greenberg said. "Bottom line, we've worked closely with PrimeSense to design the best 3D-sensing technology component for 'Project Natal.' Microsoft is fully responsible for the design and development of the 'Project Natal' sensor, including its depth sensor, RGB camera, multi-array microphone and software."