1. Declining ratings. The show's ratings had been declining for several years, and by the time it was cancelled, it was only averaging about 2.5 million viewers per episode. This was a significant drop from its peak viewership of over 10 million viewers per episode in the first season.
2. Creative differences. The show's creator, Rob Tapert, had been wanting to end the show for some time, as he felt that it had run its course. He also had creative differences with the show's executive producer, Steven L. Sears, who wanted to keep the show going.
3. Financial problems. The show was also facing financial problems, as it was becoming increasingly expensive to produce. The cost of filming in New Zealand, where the show was set, was also a major factor in its cancellation.
In the end, it was a combination of factors that led to Xena: Warrior Princess being cancelled. While it was a popular show in its early years, its declining ratings and creative differences ultimately led to its demise.