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BMW xDrive is the marketing name for the four-wheel drive system found on the BMW X1, X3, X5, and X6 crossover sport activity vehicles. It is also optional on the 1 Series (2012–present) 3 Series (2000–present), 4 Series (2014), 5 Series (2005–present), 6 Series (2012–present), and 7 Series (2010–present).
Instead of a permanent torque split (which the earlier systems feature), xDrive provides variable torque split between the front and rear axles through the use of a multi-plate wet clutch located in the gearbox on the output to the front drive shaft. This setup allows xDrive to modulate the torque split between the front and the rear axles, which is normally split at 40:60 ratio. If wheel slip is detected by the ABS/DSC system, xDrive can react within a tenth of a second to redistribute up to 100% of the engine power to the front or rear axle. The wet clutch is applied through a high speed electric servo motor turning a cam shaped actuator disc.
xDrive is connected to the ABS and DSC systems. In the case that wheelspin or directional instability still occurs while xDrive is or has been modulating the torque split, DSC will brake independent wheels to regain traction and improve directional stability without driver intervention.
The front and rear differentials in xDrive vehicles are an open differential design, thus relying on brake application by the DSC system to transfer power from the slipping wheel to the wheel with traction.
xDrive is available on the X1, X3 and is standard equipment on X5, and X6 crossover sport activity vehicles. It is also optional on the 3 Series (2003–present for sedans, 2007-2013 for coupes), 4 Series (2014), 5 Series (2005-present), 6 Series (2012–present for coupe and Gran Coupe), and 7 Series (2010–present).
BMW gradually expanded the availability of xDrive across its whole lineup to better compete with Audi's quattro and Mercedes-Benz's 4Matic, the latter two which are widely available across their respective offerings. As of the 2010-12 model years, BMW Canada has even stopped offering RWD trims if an xDrive counterpart is available for its 5 Series, 6 Series, and 7 Series cars, a major reversal from the 2009 model year and prior where only the BMW 528i and 535i were available with xDrive. BMW Canada's switch has surprised some observers, as AWD was "once the sole purview of Audi with a few odd-duck Mercedes mixed in, the switch to AWD is so strong that many luxury models are now predominantly AWD, though the 650 is the first high-end sport coupe defection among BMWs. Even more surprising is that the Coupe will only be available in AWD guise; if you want a 650 that powers only the rear wheels, you’ll have to opt for the ragtop version."
xDrive was introduced in 2003 with the new X3 and the refreshed BMW 3 Series (E46).
The first application of xDrive on V8-powered BMW cars (as opposed to crossover sport activity vehicles) was on the 2010 BMW 750i xDrive (F01), 2010 550i Gran Turismo xDrive (F07), and the 2011 BMW 550i xDrive (F10).
xDrive was first used on BMW M vehicles starting with the 2010 BMW X5 M and X6 M. BMW also confirmed that they are looking into producing a BMW M5 with xDrive, although an availability date has not been confirmed.
BMW's Dynamic Performance Control torque-vectoring system works in unison with xDrive all-wheel drive and Dynamic Stability Control. DPC is a drivetrain and chassis control system that works to regulate traction and especially correct over- and understeer by actively spreading out drive forces across the rear axle. Torque is split not only between the front and rear wheels (xDrive) but also from side to side at the rear for improved agility and added stability (through the DPC rear axle). DPC works at all speeds and normal driving, not just during hard cornering, in order to steer the car. DPC also interfaces with DSC to initially try to correct the vehicle's path using torque vectoring which results in smooth turns, whereas DSC by itself would only reduce engine power and apply the brakes to steer the vehicle. 
The DPC differential features clutch packs on both output sides that are actuated by an electric motor. The clutch pack activates a planetary gearset which causes one wheel to be overdriven. A conventional control system will use the brakes to reduce the speed of the faster-moving wheel (which is the one with less traction) and reduce engine power. This leads to increased brake wear and slower than optimal progress. In contrast, the DPC system speeds up the slower moving wheel (the one with the most traction) in order to maintain stability when needed. For example, while turning, the outer wheel is overdriven to provide greater acceleration, using the traction advantage through the dynamic loading of the outboard wheel in cornering. Meanwhile, in an oversteer situation, the inner wheel is overdriven to regain traction balance.
The first application of DPC was introduced on the BMW X6, which began production in 2008 as a 2009 model, where it is a standard equipment. A test found that "the X6 feels hundreds of pounds lighter on its feet than an X5 [without DPC]" due to the benefit of DPC even though both vehicles have similar chassis dimensions.  The BMW X5 M high performance variant also has standard DPC.
Before xDrive, BMW offered 4WD as an option in the 1980s for the 3 series and the 5 series. The system had a planetary center differential with a permanent 38-62 (front-back) torque split. Both the center and rear differential had a viscous lock which would engage automatically if slippage occurred (one shaft rotated at a significantly different speed compared to the other). The front differential had no lock of any kind.
4WD was again offered for the X5 and the 2001 3 series. The system was similar to the earlier system except without any of the locks. Instead, slipping wheels would be braked with the DSC system, helping transfer power to the wheels with traction.