This tutorial provides step-by-step instructions on how to install Xen on an Ubuntu Feisty Fawn (Ubuntu 7.04) server system (i386). You can find all the software used here in the Ubuntu repositories, so no external files or compilation are needed.
Read it at howtoforge
Xen lets you create guest operating systems (*nix operating systems like Linux and FreeBSD), so called “virtual machines” or domUs, under a host operating system (dom0). Using Xen you can separate your applications into different virtual machines that are totally independent from each other (e.g. a virtual machine for a mail server, a virtual machine for a high-traffic web site, another virtual machine that serves your customers' web sites, a virtual machine for DNS, etc.), but still use the same hardware.