Photoelectric observations of the eclipsing binary XY UMa have been carried out in B and V colours at the Ege University Observatory. Combining these newly obtained data with the previous ones available in the literature, the problem pertaining to the orbital period of the system has been investigated through a detailed description of the O-C diagram. The sinusoidal and secular changes have been found. Such variations of the orbital period have been examined in terms of three plausible mechanisms, namely (i) a light-time effect due to a third body, (ii) the orbital period modulation due to magnetic activity cycle of a component star, and (iii) a mass loss case in which the ejected material escapes out from the binary system. A combination of a magnetic activity cy de mechanism and a mass loss case is found to reproduce satisfactorily the period changes. Further, the observed photoelectric light curves of the system have been analyzed with the Wilson-Devinney approach. This analysis shows that the asymmetries of the light curves of XY UMa can be interpreted in terms of cool star-spot covering 7% of the stellar photosphere of the primary component of this binary. The system is found to be a beta Lyrae type detached binary. The absolute elements of the system are also deduced.