Xenophobia was released in a live recording as the third track on Prince's first live album One Nite Alone... Live! (along with Extraordinary, Avalanche, Family Name, Raspberry Beret, The Everlasting Now, Wanna B Ur Lover, Diamonds & Pearls, The Beautiful Ones, Nothing Compares 2 U and How Come U Don't Call Me Anymore from the same show), and the first "new" song to receive the artist credit Prince and the New Power Generation since 1993. It is the only track on the album not to have been released previously as a studio track, although a brief sample of the studio version was streamed on the NPG Music Club website in 2001. An alternate live version had also been included six months earlier on the promotional single One Nite Alone... Live EP, which was sent to radio stations in the USA to support the One Nite Alone... Tour.
Specific recording dates are not known, but basic tracking took place in autumn, 2001 (most likely at Paisley Park Studios in Chanhassen, Minnesota), with saxophone overdubs by Candy Dulfer in early December 2001. The song was included as the first track on the album Xenophobia before the title track was removed and the album renamed Xpectation. The released live version includes Prince reciting a line from Silicon, but this is not included in the studio version, which is fully instrumental.
The title was used in June 2002 for the name of Prince's third week-long Paisley Park Studios "celebration", Xenophobia Celebration, at which he played a live show each day.