From: http://www.xbox.com/en-US/support/hardware/Dolby.htm Xbox is the first and only game console to support in-game Dolby® Digital 5.1 surround sound. This lets you experience all the game sounds from your home theater system in full 5.1 surround. Before you get started, make sure you've got the following: * A digital audio output. * A free optical digital input on your receiver. * An optical digital audio cable. Digital Audio Output Your Xbox didn't come standard with a digital audio output, but you're gonna need one for this to work, so hightail it to the store for the Advanced AV Pack or High Definition AV Pack, both of which have digital audio outputs. Microsoft makes both of them. You can also buy third-party AV cables for the Xbox—but make sure they have a digital audio output. Free Optical Digital Input For this slammin' sound system to work properly, you need at least one free optical digital input on your receiver. Ready to Hook It Up? Let's Go! 1. Connect the digital audio output to your Xbox. 2. Connect one end of the optical digital audio cable to the digital audio output on your Xbox and the other end to the optical digital input on your receiver. 3. Turn on your Xbox with no disc in the disc drive. 4. In the Xbox Dashboard, select Settings. 5. Select Audio. 6. You will see an Audio Mode screen that shows Dolby Digital and DTS status. Select Dolby Digital. 7. You will see the question "Does your stereo system support Dolby Digital Audio?" Select Yes. 8. You will see Dolby Digital Enabled in the audio screen. Your Xbox is now ready for Dolby Digital gameplay. Insert a game disc and play!