Xen originated as a research project at the University of Cambridge led by Ian Pratt, a senior lecturer in the Computer Laboratory, and his PhD student Keir Fraser.

According to Anil Madhavapeddy, an early contributor, Xen started as a bet on whether Fraser could make multiple Linux Kernels boot on the same hardware in a weekend.

Soon after, Pratt and Fraser along with other Cambridge alumni including Simon Crosby and founding CEO Nick Gault created XenSource Inc. to turn Xen into a competitive enterprise product.

Project members at the time of the announcement included: Amazon, AMD, Bromium, CA Technologies, Calxeda, Cisco, Citrix, Google, Intel, Oracle, Samsung, and Verizon.

Through paravirtualization, Xen can achieve high performance even on its host architecture (x86) which has a reputation for non-cooperation with traditional virtualization techniques.

Paravirtualization avoids the need to emulate a full set of hardware and firmware services, which makes a PV system simpler to manage and reduces the attack surface exposed to potentially malicious guests.

CPUs that support virtualization make it possible to run unmodified guests, including proprietary operating systems (such as Microsoft Windows).

[60] HVM extensions also often offer new instructions to allow direct calls by a paravirtualized guest/driver into the hypervisor, typically used for I/O or other operations needing high performance.

In current versions of Xen (up to 4.2) only fully virtualized HVM guests can make use of hardware facilities for multiple independent levels of memory protection and paging.

In a performance-critical environment, PV-on-HVM disk and network drivers are used during the normal guest operation, so that the emulated PC hardware is mostly used for booting.

The following systems can operate as paravirtualized Xen guests: Xen version 3.0 introduced the capability to run Microsoft Windows as a guest operating system unmodified if the host machine's processor supports hardware virtualization provided by Intel VT-x (formerly codenamed Vanderpool) or AMD-V (formerly codenamed Pacifica).

The terms of this license do not allow the publication of this port, although documentation of the experience appears in the original Xen SOSP paper.

[79] James Harper and the Xen open-source community have started developing free software paravirtualization drivers for Windows.

Examples include: The Xen hypervisor is covered by the GNU General Public Licence, so all of these versions contain a core of free software with source code.