We present the results of new multi-color CCD photometry for the contact binary XZ Leo, together with reasonable explanations for the period and light variations. Six new times of minimum light have been determined. A period study with all available timings confirms Qian's (2001) finding that the O-C residuals have varied secularly according to dP/dt = +8.20×10-8 d yr-l. This trend could be interpreted as a conservative mass transfer from the less massive cool secondary to the more massive hot primary in the system with a mass flow rate of about 5.37×10-8 M⊙ yr-l. By simultaneous analysis of our light curves and the previously published radial-velocity data, a consistent set of light and velocity parameters for XZ Leo is obtained. The small differences between the observed and theoretical light curves are modelled by a blue third light and by a hot spot near the neck of the primary component. Our period study does not support the tertiary light but the hot region which may be formed by gas streams from the cool secondary. The solution indicates that XZ Leo is a deep contact binary with the values of q=0.343, i=78°.8, Δ (T1-T2)=126 K, and f=33.6 %, differing much from those of Niarchos et al. (1994). Absolute parameters of XZ Leo are determined as follows: M1=1.84 M⊙, M2=0.63 M⊙, R1=1.75 R⊙, R2=1.10 R⊙, L1=7.19 L⊙, and L2=2.66 L⊙.