diff --git a/doc/api/index.rst b/doc/api/index.rst
index 5cf28bb3ebb..c5a260096ac 100644
--- a/doc/api/index.rst
+++ b/doc/api/index.rst
@@ -318,3 +318,4 @@ Low level access (these are mostly used by the :mod:`pygmt.clib` package):
     clib.Session.virtualfile_from_grid
     clib.Session.virtualfile_from_matrix
     clib.Session.virtualfile_from_vectors
+    clib.Session.virtualfile_from_xrgrid
diff --git a/pygmt/clib/session.py b/pygmt/clib/session.py
index b0aaff44ec3..94a276c8ac3 100644
--- a/pygmt/clib/session.py
+++ b/pygmt/clib/session.py
@@ -26,6 +26,7 @@
 )
 from pygmt.clib.loading import load_libgmt
 from pygmt.datatypes import _GMT_DATASET, _GMT_GRID
+from pygmt.datatypes.header import gmt_grdfloat
 from pygmt.exceptions import (
     GMTCLibError,
     GMTCLibNoSessionError,
@@ -341,6 +342,22 @@ def get_libgmt_func(self, name, argtypes=None, restype=None):
             function.restype = restype
         return function
 
+    def set_allocmode(self, family, obj):
+        """
+        Set allocation mode of object to external.
+        """
+        c_set_allocmode = self.get_libgmt_func(
+            "GMT_Set_AllocMode",
+            argtypes=[ctp.c_void_p, ctp.c_uint, ctp.c_void_p],
+            restype=ctp.c_void_p,
+        )
+        family_int = self._parse_constant(family, valid=FAMILIES, valid_modifiers=VIAS)
+        status = c_set_allocmode(self.session_pointer, family_int, obj)
+        if status:
+            raise GMTCLibError(
+                f"Failed to set allocation mode of object to external:\n{self._error_message}"
+            )
+
     def create(self, name):
         """
         Create a new GMT C API session.
@@ -1612,7 +1629,7 @@ def virtualfile_in(  # noqa: PLR0912
             "file": contextlib.nullcontext,
             "arg": contextlib.nullcontext,
             "geojson": tempfile_from_geojson,
-            "grid": self.virtualfile_from_grid,
+            "grid": self.virtualfile_from_xrgrid,
             "image": tempfile_from_image,
             # Note: virtualfile_from_matrix is not used because a matrix can be
             # converted to vectors instead, and using vectors allows for better
@@ -1854,6 +1871,43 @@ def read_virtualfile(
         dtype = {"dataset": _GMT_DATASET, "grid": _GMT_GRID}[kind]
         return ctp.cast(pointer, ctp.POINTER(dtype))
 
+    @contextlib.contextmanager
+    def virtualfile_from_xrgrid(self, xrgrid):
+        """
+        Create a virtual file from an xarray.DataArray object.
+        """
+        family = "GMT_IS_GRID"
+        geometry = "GMT_IS_SURFACE"
+        matrix, region, inc = dataarray_to_matrix(xrgrid)
+
+        _gtype = {0: "GMT_GRID_IS_CARTESIAN", 1: "GMT_GRID_IS_GEO"}[xrgrid.gmt.gtype]
+        _reg = {0: "GMT_GRID_NODE_REG", 1: "GMT_GRID_PIXEL_REG"}[
+            xrgrid.gmt.registration
+        ]
+
+        data = self.create_data(
+            family,
+            geometry,
+            mode=f"GMT_CONTAINER_ONLY|{_gtype}",
+            ranges=region,
+            inc=inc,
+            registration=_reg,
+            pad=self["GMT_PAD_DEFAULT"],
+        )
+        if Version(self._info["version"]) < Version("6.5.0"):
+            # Upstream bug fixed in GMT>=6.5.0
+            self.set_allocmode(family, data)
+
+        gmtgrid = ctp.cast(data, ctp.POINTER(_GMT_GRID))
+        header = gmtgrid.contents.header.contents
+        header.z_min, header.z_max = matrix.min(), matrix.max()
+
+        matrix = np.pad(matrix, self["GMT_PAD_DEFAULT"]).astype(np.float32)
+        gmtgrid.contents.data = matrix.ctypes.data_as(ctp.POINTER(gmt_grdfloat))
+
+        with self.open_virtualfile(family, geometry, "GMT_IN", gmtgrid) as vfile:
+            yield vfile
+
     def virtualfile_to_dataset(
         self,
         vfname: str,