Xbox Live (trademarked as Xbox LIVE is an online multiplayer gaming and digital media delivery service created and operated by Microsoft Corporation. It is currently the only online gaming service (on consoles) that charges users a fee to play multiplayer gaming. It was first made available to the Xbox system in 2002. An updated version of the service became available for the Xbox 360 console at that system's launch in 2005. On the Windows platform, the service is named Games for Windows - Live, which makes most aspects of the system available on Windows computers. Microsoft has announced plans to extend Live to other platforms such as handhelds and mobile phones as part of the Live.

As Microsoft developed the original Xbox console, online gaming was designated as one of the key pillars for the greater Xbox strategy. Sega had made an attempt to capitalize on the ever-growing online gaming scene when it launched the Dreamcast video game console in 1999, including online support as standard. Nevertheless, due to lack of widespread broadband adoption at the time, the Dreamcast shipped with only a dial-up modem while a later-released broadband adapter was not widely supported or widely available. Downloadable content was available, though limited in size due to the narrowband connection and the size limitations of a memory card. The online features, while praised as innovative, were largely considered a failure, and the Dreamcast's immediate competitor, the PlayStation 2 did not ship with built-in network adapters.

Microsoft, however, hoped that the Xbox would succeed where the Dreamcast had failed. The company determined that intense online gaming required the throughput of a broadband connection and the storage space of a hard disk drive, and thus these PC-style features would be vital to the new platform. This would allow not only for significant downloadable content, such as new levels, maps, weapons, challenges and characters, to be downloaded quickly and stored, but also would make it possible to standardize bandwidth intensive features such as voice communication. Steve Balmer and Bill Gates both had a vision of making premium download content and add-ons that would attract many new paying customers to earn money. Based on this reasoning, the console included a standard Ethernet port in order to provide connectivity to common broadband networks, but did not include a modem or any dial-up support, and its online service was designed to support broadband users only. Critics scoffed at the idea, citing poor broadband adoption at the turn of the century.

When the Xbox launched on November 15, 2001, the as-yet unnamed online service was destined for a Summer 2002 deployment. Xbox Live was finally given a name at E3 2002 when the service was unveiled in its entirety. Sound dampened booths and broadband connected Xbox consoles - featuring an early version of Unreal Championship - demonstrated the service on the show floor. The Epic title was one of the flagship titles for the service, which was slated for a debut on November 15, 2002, marking the anniversary of the Xbox launch. Microsoft announced that 50 Xbox Live titles would be available by the end of 2003. Utilizing the required broadband bandwidth, Xbox Live featured a unified gaming "Friends List", as well as a single identity across all titles (regardless of the publisher), and standardized voice chat and communication; a feature that was still in its infancy.

Leading up to the launch, Microsoft enlisted several waves of beta testers to improve the service and receive feature feedback. When the service debuted, it lacked much of the functionality that later titles included, but Xbox Live grew and evolved on the Xbox and many aspects of the service were included with the Xbox 360 console out of the box, rather than through a later update. Microsoft's 5000th patent was Live-related and gave Xbox 360 users access to watch other gamers compete against each other over Xbox Live.

The packaging for playable Xbox Live titles on the original Xbox console featured the trademark gold bar underneath the Xbox header. Tom Clancy's Splinter Cell and Brute Force sported a Live "bubble" design, as they only featured downloadable content. This was changed later, wherein all Xbox Live titles included the universal gold Live bar. By the time of the Xbox 360, all titles were required to provide at least a limited form of Xbox Live "awareness".

On November 15, 2007 Microsoft celebrated Xbox Live's 5th anniversary by offering its then over 8 million subscribers the title Carcassonne free of charge and awarding gamers who had subscribed to Live since its inception 500 free Microsoft Points. Due to intermittent service interruptions during late December 2007 and early January 2008, Microsoft promised to offer a free Xbox Live Arcade game to all Xbox Live users as compensation, concluding that, Marc Whitten has released an open letter to all Xbox Live members.

Increased demand from Xbox 360 purchasers (the largest number of new user sign-ups in the history of Xbox Live) was given as the reason for the downtime. On January 18, 2008, Microsoft announced Undertow would be offered free for the week starting January 23 through January 27 as compensation. The game was for both Silver and Gold users, so people who paid for their Xbox Live service got the same compensation as non payers.

On January 6, 2009, Microsoft announced there were 17 million members.

Microsoft’s Entertainment & Devices President Robbie Bach claims that Xbox Live sets the 360 apart from its rivals. “Xbox Live is a big differentiator for us,” said Bach to investor.com, “That drives a significant amount of energy around what’s on with Xbox.” Bach cites the exclusive downloadable content for GTA IV as a reason why Microsoft’s online service is superior to its rivals.

Xbox Live exclusive servers are based in Seattle, Washington while using some of Microsoft's other servers in Quincy and Yakima, Washington.