Xanthosine dihydrate is primarily utilized in biochemical research and pharmaceutical studies. It serves as a precursor in the synthesis of various nucleotides and nucleosides, which are essential for understanding cellular processes and genetic mechanisms. In the field of enzymology, it is used to study the activity of enzymes like xanthosine phosphorylase, which plays a role in purine metabolism. Additionally, it is employed in the development of antiviral and anticancer agents, as it can be modified to create compounds that interfere with the replication of viruses or the growth of cancer cells. Its role in metabolic pathways also makes it valuable for investigating disorders related to purine metabolism, such as gout or Lesch-Nyhan syndrome.