Sometimes when trying to create new Xen domains, my Xen server will refuse to create the domain, complaining with “Error creating domain: Out of memory. xc_dom_boot_mem_init: can’t allocate low memory for domain”.
This problem is a currently known bug, there are various patches and work arounds being discussed on the Red Hat bug tracker. If you don’t want to rebuild Xen with a patch to try and resolve the issue I found that manually reducing the amount of memory that the host (Domain-0) was consuming would resolve the issue.
You can do this by running (as root):
$ xm mem-set Domain-0 1024M
Set to whatever memory value you want, if your host does nothing other than running Xen for all the VMs, you can set it quite low, I recommend 256MB.
This error only seems to happen on x86_64 servers, according to the bug report the reason was “For each vcpu of xen/ia64, it requires 16M contiguous memory for vhpt, but balloon driver didn’t consider this case when it balloons memory.”
For details, refer to bug 466021 at Red Hat.