We present an XMM-Newton observation of the eclipsing binary Algol which contains an X-ray dark B8V primary and an X-ray bright K2Ⅳ secondary. The observation covered the optical secondary eclipse and captured an X-ray flare that was eclipsed by the B star. The XMM-Newton European Photon Imaging Camera and Reflection Grating Spectrometer spectra of Algol in its quiescent state are described by a two-temperature plasma model. The cool component has a temperature around 6.4× 106 K while that of the hot component ranges from 2 to 4.0× 107 K. Coronal abundances of C, N, O, Ne, Mg, Si and Fe were obtained for each component for both the quiescent and the flare phases, generally with upper limits for S and Ar, and upper limits for C, N, and O from the hot component. F-tests show that the abundances do not need to be different between the cool and the hot component and between the quiescent and the flare phase with the exception of Fe. Although the Fe abundance of the cool component remains constant at ～0.14, the hot component shows an Fe abundance of ～0.28, which increases to ～0.44 during the flare. This increase is expected from the chromospheric evaporation model. The absorbing column density NH of the quiescent emission is 2.5 × 1020 cm-2, while that of the flare-only emission is significantly lower and consistent with the column density of the interstellar medium. This observation substantiates earlier suggestions of the presence of X-ray absorbing material in the Algol system.