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Explainable AI (XAI) – Definition & Explanation

What is Explainable AI? Learn how AI systems make their decisions understandable and why that matters.

FHFinn Hillebrandt
Last updated:January 3, 2026
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Technology
Explainable AI (XAI) – Definition & Explanation
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What is Explainable AI?

Explainable Artificial Intelligence (XAI) refers to AI systems whose decisions are understandable and explainable to humans. Unlike "black box" models that only deliver results, XAI systems make transparent how they arrived at a decision.

With the increasing use of AI in critical areas such as medicine, finance, and justice, explainability is becoming increasingly important – for both ethical and regulatory reasons.

Why is Explainability Important?

Trust

People are more likely to trust decisions when they understand how they were made. A doctor who cannot explain an AI diagnosis will trust it less.

Debugging

Explainable models make it possible to identify and correct errors. When a model makes discriminatory decisions, XAI helps find the cause.

Regulation

The EU AI Act and other regulations increasingly require transparency in AI decisions, especially for high-risk applications.

Accountability

Who is responsible when an AI decision causes harm? Without explainability, this question is difficult to answer.

Explainable AI Methods

LIME (Local Interpretable Model-agnostic Explanations)

LIME explains individual predictions by creating a simplified, interpretable model for the local area around the input. It works with any model.

SHAP (SHapley Additive exPlanations)

SHAP uses game-theoretic concepts to quantify the contribution of each feature to the prediction. It provides consistent and theoretically grounded explanations.

Attention Visualization

With LLMs, you can visualize which parts of the input the model considered most strongly when generating a response. This shows what the model "pays attention to."

Chain-of-Thought

Chain-of-Thought Prompting has the model explicitly lay out its thinking process. This makes the decision-making traceable.

History of Explainable AI

The history of explainable AI spans from early research on interpretable models to the DARPA XAI program and today's EU AI Act. The following interactive timeline shows the key milestones:

History of Explainable AI

From early research to the EU AI Act

Showing 8 of 8 milestones
DARPA Era (2015–2021)
(5 events)
Production Era (2021–present)
(3 events)

XAI Frameworks Overview

There are now numerous open-source tools and libraries that enable explainable AI. The following table shows the most important frameworks in comparison:

Challenges

  • Trade-off: Explainable models are often less performant than black-box models
  • Complexity: With billions of parameters, complete explainability is practically impossible
  • Deceptive Explanations: Models can generate plausible but incorrect explanations
  • Target Audience: An explanation for an expert differs from one for a layperson

XAI in Practice

Medicine

Diagnostic AI must be able to explain why it suggests a particular diagnosis. Doctors use this as additional information, not as a final decision.

Finance

For credit decisions, it must be traceable why an application was rejected. This is legally required in many countries.

Autonomous Driving

After an accident, it must be possible to reconstruct why the system made certain decisions.

Conclusion

Explainable AI is a key concept for the responsible use of AI. Even though complete explainability remains difficult with complex models, techniques like SHAP, LIME, and Chain-of-Thought provide important insights. With increasing regulation, XAI is moving from "nice to have" to "must have."

Sources and References
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FH

Finn Hillebrandt

AI Expert & Blogger

Finn Hillebrandt is the founder of Gradually AI, an SEO and AI expert. He helps online entrepreneurs simplify and automate their processes and marketing with AI. Finn shares his knowledge here on the blog in 50+ articles as well as through his ChatGPT Course and the AI Business Club.

Learn more about Finn and the team, follow Finn on LinkedIn, join his Facebook group for ChatGPT, OpenAI & AI Tools or do like 17,500+ others and subscribe to his AI Newsletter with tips, news and offers about AI tools and online business. Also visit his other blog, Blogmojo, which is about WordPress, blogging and SEO.

Related AI Terms

AI GovernanceArtificial Intelligence (AI)Chain-of-Thought PromptingContext WindowFine-TuningKnowledge Cutoff DateLarge Language Model (LLM)PromptPrompt InjectionSystem PromptTemperature & Sampling Parameters
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