Internet exchange points (IXes or IXPs) are common grounds of IP networking, allowing participant Internet service providers (ISPs) to exchange data destined for their respective networks. IXPs are generally located at places with preexisting connections to multiple distinct networks, i.e., datacenters, and operate physical infrastructure (switches) to connect their participants. Organizationally, most IXPs are each independent not-for-profit associations of their constituent participating networks (that is, the set of ISPs that participate in that IXP). The primary alternative to IXPs is private peering, where ISPs and large customers directly connect their networks.

IXPs reduce the portion of an ISP's traffic that must be delivered via their upstream transit providers, thereby reducing the average per-bit delivery cost of their service. Furthermore, the increased number of paths available through the IXP improves routing efficiency (by allowing routers to select shorter paths) and fault-tolerance. IXPs exhibit the characteristics of the network effect.

Internet exchange points began as Network Access Points or NAPs, a key component of Al Gore's National Information Infrastructure (NII) plan, which defined the transition from the US Government-paid-for NSFNET era (when Internet access was government sponsored and commercial traffic was prohibited) to the commercial Internet of today. The four Network Access Points (NAPs) were defined as transitional data communications facilities at which Network Service Providers (NSPs) would exchange traffic, in replacement of the publicly financed NSFNET Internet backbone. The National Science Foundation let contracts supporting the four NAPs, one to MFS Datanet for the preexisting MAE-East in Washington, D.C., and three others to Sprint, Ameritech, and Pacific Bell, for new facilities of various designs and technologies, in New York (actually Pennsauken, New Jersey), Chicago, and California, respectively. As a transitional strategy, they were effective, providing a bridge from the Internet's beginnings as a government-funded academic experiment, to the modern Internet of many private-sector competitors collaborating to form a network-of-networks, transporting Internet bandwidth from its points-of-production at Internet exchange points to its sites-of-consumption at users' locations.

This transition was particularly timely, coming hard on the heels of the ANS CO+RE controversy, which had disturbed the nascent industry, led to congressional hearings, resulted in a law allowing NSF to promote and use networks that carry commercial traffic, prompted a review of the administration of NSFNET by the NSF's Inspector General (no serious problems were found), and caused commercial operators to realize that they needed to be able to communicate with each other independent of third parties or at neutral exchange points.

Although the three telco-operated NAPs faded into obscurity relatively quickly after the expiration of the federal subsidies, MAE-East, thrived for fifteen more years, and its west-coast counterpart MAE-West continued for more than twenty years.

Today, the phrase "Network Access Point" is of historical interest only, since the four transitional NAPs disappeared long ago, replaced by hundreds of modern Internet exchange points, though in Spanish-speaking Latin America, the phrase lives on to a small degree, among those who conflate the NAPs with IXPs.^{[citation needed]}

The primary purpose of an IXP is to allow networks to interconnect directly, via the exchange, rather than going through one or more third-party networks. The primary advantages of direct interconnection are cost, latency, and bandwidth.

Traffic passing through an exchange is typically not billed by any party, whereas traffic to an ISP's upstream provider is. The direct interconnection, often located in the same city as both networks, avoids the need for data to travel to other cities—and potentially on other continents—to get from one network to another, thus reducing latency.