A kinetics scheme is described for electron‐beam excitation of the XeF laser in a neon diluent. Both Ne+and Ne* channels contribute significantly to the formation of the upper laser level. In each chain an important Penning ionization process leads to the formation of Xe+, which is the major intermediary in forming the upper laser level. Xe+2is found to be the dominant absorber of laser radiation. The effect of the weakly bound XeF ground state is discussed.