Almost four years after the official publication of the XML 1.0 Recommendation, this paper will take a close look at the interaction between Unicode and this now ubiquitous technology. We will point out how XML has whole-heartedly embraced Unicode from day one - following the path beaten by RFC 2070 and HTML 4 - by making Unicode both the foundation of its formal grammar and the default encoding which all XML parsers have to support. The paper will also cover topics such as dealing with other character encodings in XML, language tagging and normalization. We will round up the discussion by looking at the other side of the coin, i.e. how XML influences Unicode. This will involve a brief discussion of Unicode Technical Report #20 "Unicode in XML and other Markup Languages" and of MathML as well as exploration of the impact of XML in publicizing and furthering the deployment of Unicode.