  The observed characteristics of the nebulosity surrounding the SMC High Mass
X-ray Binary XTE J0111.2-7317 are examined in the context of three possible
nebular types: SNR, bowshock and HII region. Observational evidence is
presented which appears to support the interpretation that the nebulosity
surrounding XTE J0111.2-7317 is an HII region. The source therefore appears to
be a normal SMC Be X-ray binary (BeXRB) embedded in a locally enhanced ISM
which it has photoionised to create an HII region. This is supported by
observations of the X-ray outburst seen with BATSE and RXTE in 1998-1999. It
exhibited characteristics typical of a giant or type II outburst in a BeXRB
including large spin-up rates, Lx~10E38 erg/sq.cm-s, and a correlation between
spin-up rate and pulsed flux. However, the temporal profile of the outburst was
unusual, consisting of two similar intensity peaks, with the first peak of
shorter duration than the second.
