In late February 2010 the extraordinary windstorm Xynthia crossed over southwestern and central Europe and caused severe damage, affecting particularly the Spanish and French Atlantic coasts. The storm was embedded in uncommon large-scale atmospheric and boundary conditions prior to and during its development, namely enhanced sea-surface temperatures (SST) within the low-level entrainment zone of air masses, an unusual southerly position of the polar jet stream, and a remarkable split jet structure in the upper troposphere. To analyse the processes that led to the rapid intensification of this exceptional storm originating close to the subtropics (30°N), the sensitivity of the cyclone intensification to latent heat release is determined using the regional climate model COSMO-CLM forced with European Centre for Medium-range Weather Forecasts Reanalysis (ERA)-Interim data. A control simulation with observed SST shows that moist and warm air masses originating from the subtropical North Atlantic were involved in the cyclogenesis process and led to the formation of a vertical tower with high values of potential vorticity (PV). Sensitivity studies with reduced SST or increased laminar boundary roughness for heat led to reduced surface latent heat fluxes. This induced both a weaker and partly retarded development of the cyclone and a weakening of the PV tower, together with reduced diabatic heating rates, particularly at lower and mid-levels. We infer that diabatic processes played a crucial role during the phase of rapid deepening of Xynthia and thus to its intensity over the southeastern North Atlantic. We suggest that windstorms such as Xynthia may occur more frequently under future climate conditions due to the warming SSTs and potentially enhanced latent-heat release, thus increasing the windstorm risk for southwestern Europe.