The unprecedented move follows complaints that the game has been riddled with bugs and glitches, and is prone to crashes.
Microsoft later said it would also refund any dissatisfied Xbox players.
Developer CD Projekt Red has promised to issue patches to improve the game for those who do not return it.
It’s unclear when Sony Interactive Entertainment (SIE) plans to return the game to the PlayStation Store.
“SIE strives to ensure a high level of customer satisfaction, therefore we will begin to offer a full refund for all gamers who have purchased Cyberpunk 2077 via PlayStation Store,” the company said.
A Microsoft spokesperson said Xbox players would also get refunds - but is not pulling the game from sale.
"We know the developers at CD Projekt Red have worked hard to ship Cyberpunk in extremely challenging circumstances," a spokesperson said.
"However, we also realise that some players have been unhappy with the current experience on older consoles."
To rectify the situation it said it was issuing refunds to customers who have already requested one and would be expanding refunds to "anyone who purchased Cyberpunk 2077 digitally from the Microsoft Store, until further notice".
To request an Xbox refund, users needed to follow the steps listed on the Xbox refund page.
Some Sony users reported being unable to request the refund, even after the announcement - something Sony said it was working "to get up and running as soon as possible".
It can still be bought on PCs - and gamers who do not want be reimbursed for their copies can still play the game and receive updates.
In Cyberpunk 2077, players live in a criminal world where they can pay to upgrade their bodies with technology.
The action role-playing game was originally "announced" in 2012, but then re-announced in 2018 and then showcased with huge fanfare - and an appearance by Keanu Reeves - in June 2019.