We present detailed analysis of the transient X-ray source 2XMMi J003833.3+402133 detected by XMM-Newton in January 2008 during a survey of M 31. The X-ray spectrum is well fitted by either a steep power law plus a blackbody model or a double blackbo
dy model. Prior observations with XMM-Newton, Chandra, Swift and ROSAT spanning 1991 to 2007, as well as an additional Swift observation in 2011, all failed to detect this source. No counterpart was detected in deep optical imaging with the Canada France Hawaii Telescope down to a 3sigma lower limit of g = 26.5 mag. This source has previously been identified as a black hole X-ray binary in M 31. While this remains a possibility, the transient behaviour, X-ray spectrum, and lack of an optical counterpart are equally consistent with a magnetar interpretation for 2XMMi J003833.3+402133. The derived luminosity and blackbody emitting radius at the distance of M 31 argue against an extragalactic location, implying that if it is indeed a magnetar it is located within the Milky Way but 22deg out of the plane. The high Galactic latitude could be explained if 2XMMi J003833.3+402133 were an old magnetar, or if its progenitor was a runaway star that traveled away from the plane prior to going supernova.
