First, the X-ray source populations of M31 and M33 as known from Einstein and ROSAT observations are presented. Then, chandra results on the galaxies are shortly summarized which not only spatially resolved the centre areas but also supernova remnants (SNRs) in both galaxies, and led to source catalogues of restricted areas with high astrometric accuracy. Also luminosity function studies and studies of individual sources based on chandra and XMM-Newton observations led to a better knowledge of the X-ray source populations. After that I will concentrate on XMM-Newton surveys, in which more than 850 and 400 X-ray sources were detected in M31 and M33, respectively, down to a 0.2–4.5 keV luminosity of less than 1035 erg s−1. EPIC hardness ratios as well as informations from earlier X-ray, optical, and radio catalogues were used to distinguish between different source classes (SNRs, supersoft sources (SSSs), X-ray binaries (XRBs), globular cluster sources within the galaxies, and foreground stars, and objects in the background). However, many sources could only be classified as hard.They may either be XRBs or Crab-like SNRs in the galaxies or background sources. Within M31, two globular cluster sources could be identified as low mass XRBs as they showed type I X-ray bursts. Many of the SSSs in both galaxies were identified as optical novae. Due to the high frequency of outbursts in the bulge area of M31 many novae can be monitored at the same time which makes the investigation of class properties much easier compared to novae in the Milky Way or the Magellanic Clouds.