The player features a built-in Wolfson WM8740 digital-to-analog converter (DAC), a 2.4-inch TFT LCD display, and a 3100mAH lithium polymer battery which allows 10 hours of playtime.

[4] The FiiO X3 is capable of playing MP3 files as well as lossless formats such as FLAC, WAV, WMA, Monkey's Audio (APE), AAC, Ogg Vorbis and ALAC.

It is also possible to connect the player to a PC with Windows, Mac, Linux OSes and devices in order to function as a USB DAC.

"[3] Headfonics commented about the sound presentation: "a nice warm laid back tonality with next to no background noise or hiss for sensitive earphones, a well defined mid section, good tight bass without being too dominant (you can EQ that if you wish) and a slightly rolled off treble."

"[6] Los Angeles Times' music critic Mark Swed wrote that the X3 is a better alternative to the iPod, and that it utilizes the same built-in digital-to-analog converter which is found in much more expensive players; Astell & Kern models, for example, which are being sold for $699 and $1,299.

[5] Steve Guttenberg of CNET said "FiiO's nifty $200 portable high-resolution music player is a knockout," writing that it sounds "sweet" with MP3s.

Apart from a radically updated casing and interface, reminiscent of FiiO X1, it adds hardware DSD support and a better DAC (Cirrus CS4398) for a comparable price.

[9] The second generation's design also incorporates dual crystal oscillators in order to ensure precise, artifact-free sound reproduction.