Windows Live Hotmail features 5GB of storage that expands as necessary, security measures for which patents have been filed, Ajax technology, and integration with Windows Live Messenger, Spaces, Calendar, and Contacts. It has over 360 million users worldwide as of May 2010. It is available in 36 different languages.

The Hotmail development and operations groups are based in Mountain View, California. When Hotmail Corporation was an independent company, its headquarters were in Sunnyvale, California.

Similar to other major webmail services, Hotmail uses Ajax programming techniques and supports later versions of Internet Explorer, Mozilla Firefox, Safari, and Google Chrome. Some of its features include keyboard controls giving the ability to navigate around the page without using the mouse, the ability to search the user's messages including structured query syntax such as "from:ebay", message filters, folder-based organization of messages, auto-completion of contact addresses when composing, contact grouping, importing and exporting of contacts as CSV files, rich text formatting, rich text signatures, spam filtering and virus scanning, support for multiple addresses, and different language versions. In comparison to other webmail services, Hotmail offers the following unique features:

Hotmail's Active view allow users to directly interact with contents and functionalities within their e-mail message. For example, any photo attachments can be previewed directly using Active view. In addition, Hotmail also provides a partner platform which allow contents and functionalities from various websites and services such as YouTube, Flickr, LinkedIn, and United States Postal Service to be viewed directly within the e-mail message. For example, users may view the YouTube video within Hotmail when a user receives an e-mail which contains a link to the video. Other functionalities of Active view include tracking of real time shipping status from United States Postal Service and performing social networking actions on LinkedIn directly from within the e-mail message.

Hotmail integrates with Office Web Apps to allow high fidelity viewing and editing of Microsoft Office Word, Excel, and PowerPoint documents that are attached to the e-mail messages. Users can directly open attached Office documents within the web browser, and save them into their Windows Live SkyDrive. Users can also perform edits to any received Office documents, and directly reply to the sender with the edited version of the document. In addition, users may also send up to 10GB of Office documents (up to 50 MB each) using Hotmail by uploading these documents onto Windows Live SkyDrive, and share these documents with other users for viewing or collaboration.

Hotmail provides the ability to automatically group sent and received e-mails that are from the same conversation into the same conversation thread, allowing users to quicking browse through all the e-mails within the same conversation thread. This feature can be turned on or off depending on the user's preferences.

Hotmail offers a "virtual broom" which allow users to delete or move large amounts e-mails into specified folders based on the sender's information. Once a "sweep" is performed, the user may choose to configure Hotmail to remember the sweep settings and perform the same move or delete actions for any future e-mails. Users may also set up custom message rules based on the sender's or recipient's information, the subject of the e-mail, or attachments to the e-mail.

Quick views allow users to filter all e-mails (in all folders) by document attachments, photo attachments, flagged messages, or shipping updates. One-click filters allow users to filter the inbox (or specific folder) based on whether or not the e-mail message is unread, from the Windows Live Contacts list, from group mailing lists or Windows Live Groups, or from a social networking website.

Upon registration, new users can choose from a Hotmail domain address. (e.g. @hotmail.com and @live.com)

Hotmail service was founded by Sabeer Bhatia and Jack Smith, and was one of the first webmail services on the Internet. It was commercially launched on July 4, 1996, American Independence Day, symbolizing "freedom" from ISP-based e-mail and the ability to access a user's inbox from anywhere in the world. The name "Hotmail" was chosen out of many possibilities ending in "-mail" as it included the letters HTML - the markup language used to create web pages (to emphasize this, the original type casing was "HoTMaiL"). The limit for free storage was 2 Mb. Hotmail was initially backed by venture capital firm Draper Fisher Jurvetson. By December 1997, it reported more than 8.5 million subscribers. Hotmail initially ran under FreeBSD-Apache and was only converted to Microsoft products in 2000.