She is the only daughter of Aunt Xue and the younger sister of Xue Pan, a local Jinling bully. Unlike her brother, she is an excellent poet and a good elder cousin to Baoyu and Daiyu, and a good mistress to her maids. Well liked by all the servants and the mistresses of the Jia household, she also is a capable person, once helping Lady Wang manage the Rong Guo Mansion. Baochai is also extremely tactful, always careful never to offend anyone of importance in the house. Eventually, she marries Jia Baoyu.
The novel portrays Xue Baochai as a perspicacious and talented woman whose marriage became a tragedy because Jia Baoyu, her husband, is never able to truly forget Lin Daiyu, his true love, after the latter died before they could get married. There is a tragic song in Chapter 5 which foreshadows her fate, as a lonely "hermitess" who is neglected by her husband.
In the Cheng-Gao version of the novel, Xue Baochai marries Jia Baoyu under the machinations of Wang Xifeng and Grandmother Jia, causing Lin Daiyu's death through grief. However, many Redology scholars have commented that this is unlikely since, according to Zhiyanzhai and the clues of foreshadowing, Lin Daiyu dies well before their eventual wedding.