Extreme poverty has long been defined as living on or below US$1.25 a day, but the World Bank's adjustment now sets the poverty line at US$1.90 a day.
The Bank said the change reflects new data on differences in the cost of living across countries, while preserving the real purchasing power of the previous yardstick.
Using the new benchmark, the World Bank projects that 702 million people or 9.6% of the world's population will be living in extreme poverty in 2015, down from 902 million people or 12.8% of the global population in 2012.
The global development lender attributed the continued fall in poverty to strong economic growth rates in emerging markets, particularly India, and investments in education, health, and social safety nets.
"... these projections show us that we are the first generation in human history that can end extreme poverty," World Bank Group President Jim Yong Kim said in a statement.
However, he warned that slower global growth, volatile financial markets, conflicts, high youth unemployment and the impact of climate change were obstacles to meeting a UN target to end poverty by 2030, part of a new set of development goals adopted by 193 countries at the United Nations last month.
"But it remains within our grasp, as long as our high aspirations are matched by country-led plans that help the still millions of people living in extreme poverty," Kim added.
According to the Bank, around half of those living in extreme poverty by 2020 will hail from hard-to-reach fragile and conflict-affected states. Sub-Saharan Africa accounts for some half of the global poor.
Expects said the prospect of emerging economies losing steam could challenge promises to eradicate extreme poverty.