Originally developed as a query language for XML databases, XQuery has evolved into a complete functional programming language. In order to unlock all optimization opportunities, XQuery processors therefore need to combine traditional query optimization with techniques used in optimizing compilers. In this paper, we discuss how the well-known technique of function inlining can be applied to XQuery. We present an implementation of function inlining based on the query processor of BaseX, an open-source XML database. Finally, a detailed quantitative evaluation demonstrates that the performance benefits obtained by blending compiler and query optimizer techniques surpass results from any one single technique.