  We present the soft X-ray spectrum of the LINER galaxy M81 derived from a
long observation with the XMM RGS. The spectrum is dominated by continuum
emission from the active nucleus, but also contains emission lines from Fe L,
and H-like and He-like N, O, and Ne. The emission lines are significantly
broader than the RGS point-source spectral resolution; in the cross dispersion
direction the emission lines are detected adjacent to, as well as coincident
with, the active nucleus. This implies that they originate in a region of a few
arc-minutes spatial extent (1 arc-minute ~ 1 kpc in M81). The flux ratios of
the OVII triplet suggest that collisional processes are responsible for the
line emission. A good fit to the whole RGS spectrum is obtained using a model
consisting of an absorbed power law from the active nucleus and a 3 temperature
optically thin thermal plasma. Two of the thermal plasma components have
temperatures of 0.18+-0.04 keV and 0.64+-0.04 keV, characteristic of the hot
interstellar medium produced by supernovae; the combined luminosity of the
plasma at these two temperatures accounts for all the unresolved bulge X-ray
emission seen in the Chandra observation by Tennant et al. (2001). The third
component has a higher temperature (~1.7 keV), and we argue that this, along
with some of the 0.64 keV emission, comes from X-ray binaries in the bulge of
M81.

Astrophysics