The Xi^0 muon semi-leptonic decay has been observed for the first time with nine identified events using the KTeV beam line and detector at Fermilab. The decay is normalized to the Xi^0 beta decay mode and yields a value for the ratio of decay rates of $(1.8^{+0.7}_{-0.5}(stat.)pm0.2(syst.))times 10^{-2}$. This is in agreement with the SU(3) flavor symmetric quark model.