Xanthan gum is a water-soluble, extracellular polysaccharide that has gained widespread commercial use because of its strong pseudoplasticity and tolerance to high ionic strength. It possesses a rigid, rodlike structure and has been reported to form weak gels at concentrations on the order of 0.5%. The nature of these weak gels has been explored using creep measurements and dynamic mechanical spectroscopy. The usual weak gel symptoms are found in 0.02N KCl at xanthan levels exceeding 0.8% and include deviations from the Cox-Merz rule (η* > η), onset of weak power-law dependence of the loss and storage moduli, and appearance of unusually long relaxation times. We have also detected an apparent yield stress for concentrations beyond 0.8%. However, concentration-independent relaxation times and a slip/stick behavior during extended flow runs also marked the weak gel region and suggested sample heterogeneity. This condition was confirmed by optical studies that showed samples in this region to consist of a nematic liquid crystalline phase dispersed in an isotropic phase. The conclusion is made that the unusual rheological behavior of xanthan can be traced to the occurrence of this phase separation. Possible mechanisms for the formation of the anisotropic phase are also discussed.