The DARPA hopes to develop a reusable spaceplane, the XS-1, that can boost an upper stage and small orbital payload through the first stage ascent profile. The second stage would carry small satellites into low earth orbits. The initial customer for such a system is expected to be U.S. national security agencies.

In effect, the XS-1 is intended to replace the traditional expendable "first stage" of a multistage launch vehicle, but with the capability of flying at hypersonic speeds. In a fashion similar to an expendable first stage, the XS-1 should enable an expendable upper stage to separate and deploy a payload into orbit. This hypersonic stage will be designed to return to Earth and be serviced fast enough to repeat the process at least once every 24 hours.

The XS-1 program has evolved from several previous failed attempts to develop a reusable space launch vehicle. For example, the Rockwell X-30 was an advanced technology demonstrator project for the National Aero-Space Plane (NASP) program in the 1980s. It was cancelled in the early 1990s, before a prototype was completed.

Then there was the VentureStar, a single-stage-to-orbit reusable launch system proposed by Lockheed Martin and funded by NASA. This vehicle was intended to replace the Space Shuttle but was cancelled after failures stalled the X-33, subscale technology demonstrator.

The current DARPA attempt, XS-1, was announced in November 2013. The announcement stated that such a spaceplane is more feasible today due to better technologies, including light and low-cost composite airframe and tank structures, durable thermal protection, reusable and affordable propulsion and aircraft-like health management systems.

Three prime contractors were awarded initial contracts in mid-2014: Boeing , Masten Space Systems and Northrop Grumman. In August 2015, the prime contractors received additional funding to continue their XS-1 design concepts for a Phase 1B activity. DARPA began a Phase 2 activity on 7 April 2016. The first XS-1 orbital mission could occur as early as 2020.