If you are experiencing this problem yourself the first thing to do is try the following two steps to verify that you are indeed experiencing this issue: 1. When you turn on the console, examine the light on the power supply. The power supply light should illuminate green even if the three lights on the Ring of Light flash red. If the power supply light is not green, please follow these steps:

906101 Xbox 360: The power
supply light is
red

906102  Xbox 360: The power
supply light is
orange

906103  Xbox 360: The power
supply light is not illuminated 

2. Turn off the console. Wait 10 seconds, and
then turn on the console again to see whether the symptom occurs again. If your console continues to display the three flashing red lights, your console may have to be repaired.

The most common xbox360 three red lights problem is overheating. The console is designed to utilize heat sinks, vented openings, and fans to aid in dissipation of this heat. If the airflow to the vents becomes obstructed then this causes reduced system performance and hardware failure indicated by the xbox360 three red lights. Try placing the Xbox 360 console in a free open space away from any debris that might be clogging the vents. The Intercooler has also been reported be causing general hardware failures in quite a few consoles, as well as burning of the power AC input. Microsoft stated that intercooler drains too much power from the console and can cause the faults to occur.

Another xbox360 three red lights problem that is also heat related is the GPU (Graphics Processing Unit). When the GPU becomes very hot it causes the motherboard to flex causing the soldering to become loose, because the lead free solder that is used is more brittle than the older tin/lead solder that was used in the past.

Microsoft repaired consoles under the 90
day warranty for free, and charged $140
to repair out-of-warranty consoles. July, 2007 Microsoft extended the warranty of all Xbox 360 consoles suffering general hardware failures. If you have experienced the Xbox 360 three red lights, you could have it shipped to the repair center. Let me forewarn you that due to the increasing number of malfunctioning consoles, you may have to wait
8 weeks or more.

Buy a Repair Guide
Learning how to repair your XBox will save you some major money. Microsoft will not tell you how to fix these errors. They'll ask you to send your system back to them for repair. The typical cost for a repair can be as much as $140 plus shipping and handling. Also - they do not always guarantee a fix! Use this Guide to repair your own XBox 360 - and save your $140 for games. PS - If you buy a Guide, be sure to find out if the Guide includes wrapping your Xbox in a towel. This Guide does not have you wrapping your Xbox in a towel. This repair Guide will not jeopardize your Xbox.

What you're about to read will change the way that you look at video games forever. Game Secrets Exposed has everything that you need to put your ps2, xbox, Gamecube, or computer games on steroids!
In Game Secrets Exposed you will discover tons of tricks, tips, instructions, and hard to find information. Secrets that the makers of popular video game systems don't want you to have.
Knowledge that may otherwise take months to find will be revealed in minutes.
Just think about how much more fun you would have if you could take your ordinary everyday gaming experience to a whole new level.

You've spoken, and we've heard you. Good service and a good customer experience are areas of the business that we care deeply about. And frankly, we've not been doing a good enough job.
Some of you have expressed frustration with the customer experiences you have had with Xbox 360; frustration with having to return your console for service after receiving the general hardware error message on the console.
The majority of customers who own Xbox 360 consoles have had a terrific experience from their first day, and continue to, day in and day out. But when anyone questions the reliability of our product, or our commitment to our customers, it's something I take very seriously.
We have been following this issue closely, and with on-going testing have identified several factors that can cause a general hardware failure indicated by three flashing red lights on the console. To address this issue, and as part of our ongoing work, we have already made certain improvements to the console.
We are also implementing some important policy changes intended to keep you in the game, worry-free.
As of today, all Xbox 360 consoles are covered by an enhanced warranty program to address specifically the general hardware failures indicated by the three flashing red lights on the console. This applies to new and previously-sold consoles. While we will still have a general one year console warranty (two years in some countries), we are announcing today a three-year warranty that covers any console that displays a three flashing red lights error message. If a customer has an issue indicated by the three flashing red lights, Microsoft will repair the console free of charge-including shipping-for three years from the console's purchase date. We will also retroactively reimburse any of you who paid for repairs related to problems indicated by this error message in the past. In doing so, Microsoft stands behind its products and takes responsibility to ensure that every Xbox 360 console owner continues to have a fantastic gaming experience.
If we have let any of you down in the experience you have had with your Xbox 360, we sincerely apologize. We are taking responsibility and are making these changes to ensure that every Xbox 360 owner continues to have a great experience.