The function of an XML file in data representation is to structure, store, and transport data in a platform-independent format. XML (eXtensible Markup Language) allows users to define their own tags, making it flexible for various applications. This self-describing nature facilitates data interchange between systems, especially in web services and APIs. XML files are also commonly used for configurations, data storage, and as a means of representing structured data that can be easily read and processed by machines.