diff --git a/xCAT-server/lib/perl/xCAT/XML.pm b/xCAT-server/lib/perl/xCAT/XML.pm
index 972b331d2..9c3a2afdc 100644
--- a/xCAT-server/lib/perl/xCAT/XML.pm
+++ b/xCAT-server/lib/perl/xCAT/XML.pm
@@ -56,6 +56,7 @@ sub build_tree_xml_parser {
                                no_network => 1,
                                expand_entities => 0,
                              ]);
+  $xp->setHandlers(ExternEnt => sub { return $_[2] });
   my($tree);
   if($filename) {
       # $tree = $xp->parsefile($filename);  # Changed due to prob w/mod_perl
diff --git a/xCAT-test/unit/xml_external_entity.t b/xCAT-test/unit/xml_external_entity.t
new file mode 100644
index 000000000..02f68605c
--- /dev/null
+++ b/xCAT-test/unit/xml_external_entity.t
@@ -0,0 +1,72 @@
+#!/usr/bin/env perl
+use strict;
+use warnings;
+
+use FindBin;
+use File::Temp qw(tempfile);
+use Test::More;
+
+my $libdir = "$FindBin::Bin/../../xCAT-server/lib/perl";
+my $xmlpm  = "$libdir/xCAT/XML.pm";
+plan skip_all => 'xCAT::XML not found' unless -r $xmlpm;
+eval { require XML::Simple; require XML::Parser; 1 }
+    or plan skip_all => 'XML::Simple and XML::Parser are required';
+
+# xCAT::XML loads xCAT::MsgUtils, which loads much of the xCAT tree. The parser
+# paths never call it. Stub it before loading xCAT::XML.
+BEGIN { $INC{'xCAT/MsgUtils.pm'} = 1; }
+{ package xCAT::MsgUtils; }
+
+# Prepend so the source-tree module wins over any installed xCAT::XML.
+unshift @INC, $libdir;
+require xCAT::XML;
+require Data::Dumper;
+
+my ($sfh, $secret_path) = tempfile('xcat_xxe_XXXXXX', TMPDIR => 1, UNLINK => 1);
+print {$sfh} "SECRET-CONTENT-DO-NOT-LEAK";
+close $sfh;
+
+my $payload = <<"XML";
+<?xml version="1.0"?>
+<!DOCTYPE r [ <!ENTITY xxe SYSTEM "file://$secret_path"> ]>
+<data>&xxe;</data>
+XML
+
+sub parsed_tree {
+    my $parser = xCAT::XML->new;
+    my $tree = eval { $parser->XMLin($payload, SuppressEmpty => undef, ForceArray => 1) };
+    return ($tree, $@);
+}
+
+# A parser path must parse the payload, replace the external entity with its
+# system identifier, and never read the file contents.
+sub check_path {
+    my ($label) = @_;
+    my ($tree, $error) = parsed_tree();
+    is($error, '', "$label: the payload parses without error");
+    ok(defined($tree), "$label: the parser returns a tree");
+    my $dump = defined($tree) ? Data::Dumper::Dumper($tree) : '';
+    like($dump, qr{\Q$secret_path\E},
+        "$label: the external entity is replaced by its system identifier");
+    unlike($dump, qr/SECRET-CONTENT-DO-NOT-LEAK/,
+        "$label: the external entity content is not read");
+}
+
+# The modern path: XML::Simple with new_xml_parser.
+SKIP: {
+    skip 'XML::Simple lacks new_xml_parser on this system', 4
+        unless exists &{'XML::Simple::new_xml_parser'};
+    check_path('modern path');
+}
+
+# Force the older compatibility path (build_tree_xml_parser's own code) by
+# removing new_xml_parser, as on XML::Simple 2.20-2.24.
+{
+    no strict 'refs';
+    no warnings 'redefine';
+    undef *{'XML::Simple::new_xml_parser'} if exists &{'XML::Simple::new_xml_parser'};
+}
+ok(!exists &{'XML::Simple::new_xml_parser'}, 'compatibility path is forced');
+check_path('compatibility path');
+
+done_testing();