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Correspondence Letter

 XOMA Ltd.

 2910 Seventh Street

 Berkeley, California 94710

 December 4, 2007

 Securities and Exchange Commission

 Washington, D.C. 20549

 Ladies and Gentlemen:

 Pursuant to Mr. Rosenberg’s Comment Letter to our CEO, Steven B. Engle dated November 19, 2007, we are submitting the following response regarding the
Form 10-K for the year ended December 31, 2006 and the Form 10-Q for the quarterly period ended September 30, 2007 for File No. 000-14710.

 The
Comment Letter contains six comments related to the Company’s 2006 Form 10-K, which are numbered one to six in your letter, respectively, and one comment related to the Company’s third quarter 2007 Form 10-Q, which is numbered seven in
your letter. Our responses attached use the same numbering to assist the Staff in their review.

Sincerely,

XOMA Ltd.

/s/ J. David Boyle II

J. David Boyle II

Vice President, Finance and Chief Financial Officer

 December 4, 2007

 Jim B. Rosenberg

 Senior Assistant Chief Accountant

 Division of Corporation Finance

 United States Securities and Exchange Commission

 Washington, D.C. 20549

 Mail Stop 6010

Re:
Comment Letter Dated November 19, 2007 to XOMA Ltd.

 Form 10-K for the Fiscal Year Ended December 31, 2006

 Form 10-Q for the Quarterly Period Ended September 30, 2007

 File No. 000-14710

 Dear Mr. Rosenberg:

 We refer to your comment letter dated November 19, 2007 (the “Comment Letter”), which sets forth the comments of the staff of the
Securities and Exchange Commission (the “Staff”) regarding the Form 10-K for the year ended December 31, 2006 (the “2006 Form 10-K”) and the Form 10-Q for the quarterly period ended September 30, 2007 of XOMA Ltd. (the
“Company,” “we” or “us”).

 The Comment Letter contains six comments related to the Company’s 2006 Form 10-K, which are
numbered one to six in your letter, respectively, and one comment related to the Company’s third quarter 2007 Form 10-Q, which is numbered seven in your letter. Our responses below use the same numbering to assist the Staff in their review.

 Comments Related to the Form 10-K for the Fiscal Year Ended December 31, 2006

1.
Comment: The agreements with the following companies do not appear to be filed as exhibits: Lexicon, NIAID, Taligen, AVEO, Attenuon, and Triton. Please provide us with
an analysis supporting your determination that you are not substantially dependent on each of these agreements.

 Response: (1) With regard to the Company’s agreements with the National Institute of Allergy and Infectious Diseases (“NIAID”), these agreements have been filed with the Commission. We refer you to the
following exhibits listed in the Exhibit Index of the 2006 Form 10-K:

•

 10.45 Agreement dated July 28, 2006, between XOMA (US) LLC and the National Institute of Allergy and Infectious Diseases, which is incorporated by
reference to the referenced exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006.

•

 10.53 Agreement dated March 8, 2005, between XOMA (US) LLC and the National Institute of Allergy and Infectious Diseases, which is incorporated by
reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

 (2) With regard to the Company’s agreements with Lexicon, Taligen, AVEO, Attenuon,
and Triton, we conducted our analysis of whether we are required to file these agreements as exhibits to our Form 10-K in accordance with the subpart to Item 601(b)(10)(ii)(B) of Regulation S-K as follows:

 Lexicon – The agreement with Lexicon is a cost and revenue sharing and development collaboration agreement. We have not yet successfully
commercialized any product targets from this collaboration, and our costs incurred under this agreement were not material to our 2006 results. We currently estimate that this agreement will not become individually material to us in any past, current
or future period.

 Taligen – The agreement with Taligen is a process development and manufacturing agreement. The agreement
calls for Taligen to pay XOMA for development costs including a mark-up. The total potential revenue is forecast to be approximately $2.9 million over the contract life. We currently estimate that this agreement will not become individually material
to us in any past, current or future period.

 AVEO – The two agreements with AVEO are a process engineering agreement and a
development and manufacturing agreement. The engineering agreement provides the Company with an upfront payment of $25,000, annual payments of $30,000, and allows for potential future milestone payments of up to $7.15 million, in addition to
royalties on any future product sales. The development agreement calls for AVEO to pay XOMA for development costs, plus a mark-up, for potential revenue of $5.8 million over the contract life.

 Further, we have not yet successfully commercialized any product targets from these agreements, and our revenues and expenses under these agreements were
not material to our 2006 results. While these contracts represent significant potential revenue to the Company if certain milestones are reached and if the product target(s) are successfully commercialized, the Company does not believe it is
substantially dependent on these agreements or that the termination of either or both agreement would materially adversely affect the Company.

 Attenuon – The agreement with Attenuon is an engineering development agreement. The agreement provides the Company with an upfront payment of $35,000, annual payments ranging from $30,000 to $70,000, and allows for potential
future milestone payments of up to $6.06 million, in addition to royalties on any future product sales. We have not yet successfully commercialized any product targets from this agreement, and thus this agreement is not currently material to us. We
estimate that this agreement will not become individually material to us in any past, current or future period.

 Triton – The
agreement with Triton is a license and commercialization agreement. The agreement provides the Company with upfront payments of $250,000 and an optional $500,000 for study materials, and allows for potential future milestone payments of up to $1.9
million, in addition to royalties on any future product sales. We have not yet successfully commercialized any product targets from this agreement, and thus this agreement is not currently material to us. We currently estimate that this agreement
will not become individually material to us in any past, current or future period.

 Combined revenues from these agreements represented only 6.7% of revenue for the year ended
December 31, 2006 and 10.2% of revenue for the nine months ended September 30, 2007, as shown below (dollars in thousands):

 Revenue

Year Ended
December 31, 2007

Nine Months Ended,
September 30, 2007

 Combined revenue from Lexicon, Taligen, AVEO, Attenuon, and Triton

$
1,974

6.7
%

$
7,092

10.2
%

 All other companies

27,524

93.3
%

62,436

89.8
%

 Total as reported

$
29,498

100.0
%

$
69,528

100.0
%

 Based on the revenue as reported above, as well as management’s current estimates of the
potential future revenues and shared expenses to be recognized under each of these agreements, we have determined that each of these agreements is not material to the Company and thus the Company is not substantially dependent on any of the
aforementioned agreements.

 Based on the foregoing analysis, the Company has determined that none of these agreements are required to be
filed as Exhibits under Item 601 of Regulation S-K.

2.
Comment: Please revise your note to the table of contractual obligations to include the aggregate amount of potential milestone payments along with a description of
the events that would trigger these payments. Also explain to us why you do not include a discussion of these potential obligations in your financial statements.

 Response: For reference, the Company included the following footnote disclosure to the table of contractual obligations on page 49 of the
2006 Form 10-K.

 In addition to the above, we have committed to make potential future “milestone” payments to third parties as
part of licensing and development programs. Payments under these agreements generally become due and payable only upon the achievement of certain developmental, regulatory and/or commercial milestones. Because it is uncertain if and when these
milestones will be achieved, such contingencies have not been recorded on our consolidated balance sheet.

 In response to the
Staff’s comment, we note that the Company cannot reasonably estimate the aggregate amount of potential milestone agreements, as certain agreements contain milestones for each product candidate identified during the course of the related
development or collaboration agreement. The maximum potential payments will vary depending on the number of product candidates, which cannot be reasonably estimated as they are in the early stages of development and their potential approval cannot
be determined at this time. We have disclosed the existence of these obligations in the disclosure as noted above, in accordance with the guidance of Item 303(a)(5) of Regulation S-K.

 We also note that a description of the events that would trigger these payments has already been included
in the disclosures included on page 49 of the 2006 Form 10-K. Specifically, “payments under these agreements generally become due and payable only upon the achievement of certain developmental, regulatory and/or commercial milestones.” We
believe this disclosure captures each of the specific events that generally trigger the Company’s liability to make future milestone payments.

 Accordingly, we do not believe that it is necessary to amend the footnote disclosure referred to above in future filings to comply with the requirements of Item 303(a)(5).

 With regard to the Staff’s request for an explanation as to why we do not include a discussion of these potential obligations in our financial
statements, we have reviewed the nature of our potential obligations under these agreements and have determined that these obligations could be viewed as requiring disclosure based on SFAS No. 5, paragraphs 18-19, as a “commitment”
that we estimate is reasonably possible will be paid. As noted above, however, we are not able to indicate a range or maximum of potential milestone payments. Accordingly, in future filings, beginning with our 2007 Form 10-K, we intend to include in
the notes to our consolidated financial statements disclosure substantially similar to the disclosure in the MD&A section of our 2006 Form 10-K referred to above.

3.
Comment: Your CEO and CFO concluded that the “disclosure controls and procedures are effective in timely alerting them” to information that is required to be
disclosed. Your quarterly reports on Form 10-Q contain similar language. This conclusion does not appear to satisfy Item 307 of Regulation S-K and Rule 13a-15(e) under the Exchange Act. Rule 13a-15(e) states that disclosure controls and
procedures should ensure that information required to be disclosed “is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms”. Please confirm that the disclosure controls
and procedures ensure that information required to be disclosed is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. If your are unable to confirm this statement,

•

 Please provide further explanation including a description of any weaknesses that prevented the CEO and CFO from concluding that the disclosure controls and
procedures were effective: and

•

 Amend the Form 10-K to describe the weaknesses.

 Response: We confirm that our evaluations of disclosure controls and procedures for the 2006 Form 10-K and the quarterly reports on Form 10-Q for the first, second and third quarters of 2007 were
conducted in accordance with the requirements of Item 307 of Regulation S-K and Rule 13a-15(e) under the Exchange Act. We further confirm that the disclosure controls and procedures for these respective periods were effective to ensure that
information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

 We note that for the 2006 Form 10-K, as stated in our original disclosures, “we conducted an
evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended,” (emphasis added). We do recognize Staff’s
comment, however, that our conclusion as to the effectiveness of our disclosure controls and procedures did not specifically refer to the language of Rule 13a-15(e). Therefore, we intend to amend the language in our future filings, beginning with
our 2007 Form 10-K, to read substantially as follows:

 Under the supervision and with the participation of our management, including our
Chairman of the Board, Chief Executive Officer and President and our Vice President, Finance and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated
under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or
submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and
communicated to our management, including the Chairman of the Board, Chief Executive Officer and President and Vice President, Finance and Chief Financial Officer, as the principal executive and financial officers, respectively, to allow timely
decisions regarding required disclosures. Based on this evaluation, our Chairman of the Board, Chief Executive Officer and President and our Vice President, Finance and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.

4.
Comment: Please explain to us why it is appropriate to recognize a “cumulative impact” instead of the change on a prospective basis related to this change in
estimate. Refer to paragraph 19 of SFAS 154.

 Response: We would like to clarify our use of the phrase
“cumulative impact,” as noted in the Staff comment, as such phrase is similar to the term “cumulative effect” used in paragraphs 7-9 of SFAS No. 154, which describes the appropriate accounting for changes in accounting
principle rather than our intended accounting for changes in estimate, which is governed by paragraph 19 of SFAS No. 154.

 Our use of
the phrase was intended to convey that for each reporting period, we update our estimate of progress made during the period for each agreement with contract revenue and related research and development costs. We account for contract revenue
agreements by a proportional performance, or output based, method where performance is based on the estimated progress made toward elements defined in the contract. We recognize revenue under these arrangements as the related research and
development costs are incurred and collectibility is reasonably assured. At the end of each period, we estimate our completion of the project based on services received by the customer and compare this to the cumulative progress recognized through
the end of the preceding period. This difference, which represents the progress we completed during the period, is the amount we recognize as revenue in each period (which we referred to as “cumulative impact”). We intended to co