Xanatos was born in Bar Harbor, Maine, in 1955, the son of Petros Xanatos, a local fisherman.  In 1975, he received a rare 10th century coin from a mysterious stranger (actually a member of the Illuminati), which he sold to a collector for 20,000 dollars. Xanatos then used that money to found Xanatos Enterprises, increasing his wealth until now he has become one of the richest men in the world. He also attended college at Dartmouth. 
In the course of time, Xanatos came into contact with Halcyon Renard, the CEO of Cyberbiotics. He and Renard quickly became determined rivals, particularly after Xanatos lured away two of Renard's most talented employees, Owen Burnett and Anton Sevarius. Also around this time, Xanatos and Renard's daughter Janine Renard a.k.a. Fox met, and became attracted to each other.
Not long after Owen entered Xanatos' service, becoming his right-hand-man, he revealed his true identity to the billionaire as Puck, and offered him a choice between a single wish from Puck, or a lifetime of service from Owen. Xanatos chose Owen, and Owen has served him very capably ever since.
At some point between 1975 and 1994, Xanatos obtained the Grimorum Arcanorum from Mary and Finella.  The two women also, with Brooklyn, arranged for him to meet Demona, Owen/Puck introducing the two to each other.  Demona informed Xanatos about Goliath and his clan at Castle Wyvern, and the two decided to awaken them, hoping that they could prove useful for many of his less-than-legal enterprises.  Buying Castle Wyvern, he relocated it from the Scottish coast to the top of the Eyrie Building in New York, his personal headquarters, thus awakening the gargoyles. Next, he tricked the clan into believing that he had been robbed of three valuable computer disks from Cyberbiotics and asked them to recover them from him; in fact, the computer disks were Cyberbiotics property, which Xanatos hoped to obtain for himself. Using the information on the disks, he created the Steel Clan robots, which he intended as replacements for the gargoyles in case they turned out to be less easy to control than he had hoped. However, Elisa Maza alerted Goliath to what was actually going on, and in the ensuing melee, Goliath and his clan defeated the Steel Clan. Xanatos was afterwards arrested and sent to prison for receiving stolen property, for a few months’ time. ("Awakening")
He quickly got out of prison, however, thanks to good lawyers, and returned to Castle Wyvern. ("Enter Macbeth") While making a few efforts to recapture the gargoyles, he was now aware of the fact that bending them to his will would not be easily accomplished. And since the Steel Clan had not lived up to his expectations, he embarked on other schemes to create his own gargoyles. The first of these was by mutating four humans, including Maggie Reed and Elisa's own brother Derek, into gargoyle-like creatures; this plan failed, however, when the Mutates decided to go their own way, and live in the Labyrinth as allies to Goliath and his clan. ("Metamorphosis", "The Cage") The second was when he had Goliath cloned, producing Thailog; this scheme miscarried also, even more alarmingly, for Thailog learned from Xanatos too well, promptly robbed him of 20 million dollars, and went off on his way as a future rival. ("Double Jeopardy")
During this time, Xanatos and Fox re-met, and finally became first engaged, then married outright. The gargoyles became involved when the Eye of Odin, which Xanatos had given Fox as an engagement gift, turned her into a werefox, and began to endanger her very life; Goliath came to Xanatos' aid, and wrested the Eye from Fox, saving her. ("Eye of the Beholder") Xanatos invited Goliath to his wedding shortly afterwards, for the purpose of tricking him into supplying his half of the Phoenix Gate alongside Demona's; he then used the Gate to travel back in time with Fox, Petros, Goliath, and Demona to Scotland in the year 975. There, Xanatos rescued Princess Elena from the Archmage's bandits, in return for which a grateful Prince Malcolm gave him a few coins. One of these Xanatos sent to the Illuminati Society with instructions to deliver it to his younger self in 1975, hence setting up the foundations for his future wealth. ("Vows")
Shortly before his marriage, he became a member of the Illuminati (currently a member of the lowest rank, Thirty-Six).
Xanatos and Goliath became allies once more, in earnest, when Demona cursed New York so that the bulk of its humans would turn to stone at night (this incident bringing his alliance with her to an end, along the way). Working together, they managed to break the spell. ("City of Stone") The truce was only temporary, however, for Xanatos continued to make other moves against the gargoyles, among them sending the upgraded Pack after the clan, kidnapping Hudson to use as a guinea pig for the Cauldron of Life, and even using Goliath and Angela for Coyote-bait in Arizona. ("Upgrade", "The Price", "Cloud Fathers")
The real end of the war between Goliath and Xanatos came in 1996 when Xanatos' son Alexander was born, and Oberon and Titania decided to take the child away to Avalon. ("The Gathering" Part One) Xanatos and the clan joined forces in battling Oberon, although they (even with help from Halcyon Renard and Puck) were defeated in the end. But Goliath offered the compromise of having Puck teach Alex magic, which Oberon accepted. Grateful to the gargoyles for coming to Alex's rescue, Xanatos promised to do whatever he could to repay them. ("The Gathering" Part Two)
He showed this in two ways. First, he helped solve Coldstone's multiple personality problem by building robotic bodies to house the souls of Desdemona and Iago, although he needed some help from Puck and Alexander in completing the process. ("Possession") Second, when the Clock Tower was destroyed by the Hunters and the gargoyles subsequently trapped by the Gargoyle Taskforce at Saint Damien's Cathedral, Xanatos rescued the clan and offered them their old home in the castle, with "no catch, no plot, no strings." The feud was over. ("Hunter's Moon" Part Three)
Shortly after the events of the Hunter's Moon, Xanatos ignored a phone call from Mr. Duval, resulting in Martin Hacker approaching him in his office, and summoning him to a Halloween party at the White House, while his own Masque (where the gargoyles would subtly be introduced to people) was taking place. ("The Journey", "Invitation Only") While at the White House, Xanatos had a private meeting with Quincy Hemings who gave him his first real mission from the Illuminati. ("Bash")
Upon returning to Manhattan, he summoned Coldsteel ("Reunion") to assist him on a mission to steal the Stone of Destiny, agreeing to permanently disable the tracking device inside Coldsteel in exchange for his cooperation. He also constructed Coyote 5.0 to take part in the mission. Xanatos then flew, with Fox and Alexander, to London. ("The Rock")
While in London, Xanatos used a shoe box to initiate a bomb scare at the Coldstream Bridge. During the distraction, Xanatos replaced the Stone with a duplicate. He then intended to make a double switch and stiff the Illuminati, keeping the original for himself. But the Stone itself told him this was pointless: the Spirit of Destiny could not be contained in one vessel. ("Rock of Ages")
Some time in the future, when the New Olympians reveal themselves to humanity, after they arrive at the United Nations, Xanatos will attempt to "make friends" with the New Olympians. Make trade with them, and if he gets the better end of the trade, well, that's business. 
Xanatos is a strongly practical man. He considers revenge foolish and beneath him; what motivates his various actions, instead, is his practical goals. One of these is to increase his current power and influence, and that of Xanatos Enterprises; it was for this purpose that he acquired or sought to acquire such followers as the gargoyles, the Pack, and the Mutates (not to mention such employees as Owen and Sevarius). Xanatos favorite word is "acquire". Acquire things; acquire people; acquire power... anything he sets his sights on. What he can get by legitimate purchase, he'll buy; it's easier. What he can't buy, he'll take... by subterfuge if possible or force if necessary. What he can't take he might destroy, less out of spite than to make sure it won't later be used against him. But he hates waste, so he wouldn't make the latter decision lightly. In Xanatos' opinion, he acquired Manhattan long ago. It's his town.
Xanatos has no interest in taking over the world, for the simple reason that he doesn't see any need to; he's been able to accomplish the greater part of his goals under the current system.
Another goal of Xanatos is to become immortal, since he secretly fears old age and death - just as he fears anything that he can't control (the death of his mother may have contributed to Xanatos' fear of death and old age.).  He has made several such efforts at it, including the Cauldron of Life incident, and employing the Emir to capture Anubis ("Grief"); these efforts all failed, however. Xanatos, indeed, will eventually die, at some point before 2198; however, in a deeper sense, he will gain immortality through his son Alexander.
Unlike many of the gargoyles' enemies, Xanatos' style as a villain may be best described as less "evil" than "amoral", in that he bears Goliath and his clan no malice or grudge, and indeed, regards them with a combination of interest and amusement. His pursuit of them was motivated purely by a desire to make use of them for his plans, and he had no difficulty (from his point of view) making peace with them after they saved his son. His various scheming activities are based on accomplishing what he wants done rather than out of hatred or vengeance - although his plans rarely show much regard for the welfare of anybody else.
However, Xanatos is not completely heartless. He does love Fox very much (a revelation which actually took him by surprise), and their son Alex as well. He also does have a strong regard, deep down, for his father Petros, in spite of their somewhat strained relations, and took care to invite Petros both to his wedding and to Alex's birth. While he'd prefer not to admit it, Xanatos does in fact care what his father thinks of him.  His familial devotion serves as the other side of the coin to the smirking, Machiavellian schemer.
Xanatos is cool, confident and arrogant without that arrogance being a weakness. Tall, handsome and erudite, over six feet tall and built like a football player or wrestler, but usually impeccably dressed in custom made suits. He wears his hair long, tied back in a ponytail, and sports a neatly trimmed goatee.
He is also a known art fancier with his own personal museum that houses the Star of Arabia, Coyote Diamond, was once home to the Eye of Odin, and he had also hoped to add the Stone of Destiny to his collection.
While Xanatos is mainly a planner and trickster, he's not afraid to go into battle himself when the situation calls for it. He is well trained in the martial arts, and for those occasions when he needs more than that, has a crimson battle suit in the shape of a Steel Clan robot to don. In this armor, he was even able to battle Goliath to a standstill. In all, Xanatos is a very formidable opponent, and one not to be taken lightly.
Much to Goliath's consternation, Xanatos showed too much of an interest in Katana, Nashville, Fu-Dog, and Egwardo for Goliath's comfort. But much to his relief, Xanatos had taken Fox and Alexander up to Xanadu for the summer... at least until he returned to offer Batman and Iron Man a spot in his new club, "Rich Boys With Big Toys".
In contrast to his canon counterpart, Xanatos as depicted in TGC is more of a benefactor and friend to the clan.
Later on, while attending an Illuminati meeting, Xanatos sneaked into the cell holding Broadway to free him and the rest of the clan when they are taken captive. He said that he found his membership distasteful, while finding it to be useful. ("To Serve Mankind")
In early 1997, he bribed several construction workers employed by John Castaway to modify a trap designed to kill the clan, while suggesting to Goliath that they make a clean start elsewhere. ("Angels in the Night")
Behind the Scenes
Voice Actor: Jonathan Frakes
During the show's development, Xanatos was originally known as Xavier and he was the descendant of the wizard that originally cursed the gargoyles to sleep for a thousand years. According to Greg Weisman, he was, "rich, powerful and petulant. Very Captain Hook."  This idea of a descendant of an ancient enemy was eventually used for Wolf and Hakon in "Vendettas".
The name Xavier was eventually dropped because of the similarity to Professor X (Charles Xavier) in Marvel Comics X-Men. Still, Greg Weisman wanted a name with a similar sound to it. Thinking of Thanatos, the Ancient Greek God of Death, and since X and TH sounds are often interchanged, he tried the name Xanatos, which was quickly accepted by other crew members. Some time later, he checked the phone book and found that Xanatos was in fact a real name. The character's first name, David, was chosen specifically because the master gargoyle had been named Goliath, thus echoing the Biblical story of David and Goliath, but with the hero and villain roles reversed. 
Odysseus was also in Greg Weisman's mind when developing Xanatos into a human trickster, particularly when the character became Greek-American. 
Coincidentally, Jonathan Frake's wife, Genie Francis, was expecting at the same time as Fox. 
In the third season finale of the Adult Swim series, The Venture Bros., their arch-enemy, the Monarch, dons a suit of armor he calls his "Deaths-Head Panoply." The armor bears several similarities to Xanatos' Steel Clan armor, except in gold and with a butterfly motif instead of a gargoyle.
The Adult Swim series Robot Chicken featured a short sketch in the show's eighth season featuring an extremely wasteful Xanatos pushing a sleeping Goliath (both animated Kenner Action Figures) off a building before slipping off himself thanks to New York's typical pigeon population.
On TV Tropes, a wiki devoted to cataloging and defining various writing "tropes", the Xanatos Gambit was named for David Xanatos' signature style of turning any defeat into a victory. Before long, "Xanatos" became a standard modifier for pages relating to devious planning (i.e. "Xanatos Roulette" for a Gambit gone out of control, or "Xanatos Sucker" for the person being manipulated), culminating in a sub-section of such tropes being titled, "Xanatos Planned This Index".