Windows XP SP3 includes all previously released Windows XP updates, including security updates, hotfixes and select out-of-band releases. For example, the Service Pack includes the Microsoft Management Console (MMC) 3.0 and the Microsoft Core XML Services 6.0.

Microsoft is not adding significant functionality from newer versions of Windows, such as Windows Vista, to Windows XP through XP SP3. For instance, Windows XP SP3 does not include Windows Internet Explorer 7, although Windows XP SP3 does include updates to both Internet Explorer 6 and Internet Explorer 7, and it will update whichever version is installed on the computer.

Also added is support for NAP (Network Access Protection), which lets network administrators set policies for system configuration. For example, requiring that specific updates must be installed before a client is allowed to log on to the network.

Like in Windows Vista, new XP with SP3 installs can proceed without entering a product key during Setup.

Another feature from Windows Vista: Windows XP gains the ability to ignore network routers that incorrectly drop certain kinds of network packets.