Extreme Programming (XP) is an agile software development methodology that emphasizes communication, feedback, and simplicity. It consists of 12 specific practices like pair programming, planning games, small releases, and on-site customers. The goals of XP include reducing costs, shortening development timelines by 25-50%, and keeping requirements flexible through constant collaboration between developers and customers. Studies show that XP can help complete projects at a lower cost and faster pace by improving code quality, knowledge sharing, and responsiveness to changing needs.