Europeans will not be able to upgrade directly from Vista to Windows 7.
In the past Microsoft has given people running its main operating system a chance to upgrade to a new version when it becomes available.
While that option will be offered in the US, Microsoft said its efforts to comply with competition regulations meant it could not do so in Europe.
European regulators dismissed the claim, saying the move limited choices rather than opening them up.
Windows 7 is due to go on sale on 22 October around the world.
Anyone outside Europe buying a new PC between now and then - running Windows Vista Home Premium, Business or Ultimate - will get the chance to upgrade the operating system on it, at no cost, to Windows 7.
Some PC makers may impose a fee to ship disks with Windows 7 on them to customers.
The worldwide upgrade option programme is due to begin on 26 June.
Those who want to upgrade to Windows 7 on a older PC will pay a reduced price for the software. Stand alone versions of Windows 7, that can run on more than one PC, will also be available.
Microsoft said the upgrade option will not be available to Europeans.
"We will not be able to offer an upgrade product within Europe," said John Curran, Windows business lead at Microsoft UK, adding that only the full version of the software will be available to Europeans.
Microsoft will make an upgrade offer to buyers of new PCs but will send them a full version of the software rather than an upgrade version.
In Europe, the full version will cost the same as an upgrade version.
The upgrade option was not available, Microsoft said, because it was trying to comply with European competition regulations.
Microsoft has said that Windows 7 will be offered in Europe without the Internet Explorer browser on board.
A Commission spokesman dismissed Microsoft's claim that it was taking the action to comply with European laws.
"The essential point of our case is consumer choice," said the spokesman.
"We would want to look extremely closely at the terms under which Microsoft is making Internet Explorer available to computer manufacturers," he said.
"If the effect of the technical separation of Windows and Internet Explorer is neutralised by particular terms and conditions they offer to manufacturers to install Internet Explorer, they're no better off."
The preferred remedy for Europe, he said, was to offer users a screen when they first switch on Windows 7 that gives them a choice between IE, Chrome, Firefox, Safari or Opera.
"For them to claim that this is somehow imposed by the Commission or is going to resolve the problem with the Commission is far from clear," he said.
"It's certainly not because we've asked them to do it."