The Red Ring of Death is an XBOX 360 technical error that arises due to a general hardware failure or malfunction within the system.
When this error occurs three of the XBOX's 360's LED lights that surround the power button flash red in lieu of the four green lights that usually appear.
As with any problem, if you want to fix it, it is important to look at the root of why that particular problem occurred.
Reasons for the XBOX 360 Three Red Lights issue:

• Temperature / Heat: Heat contributes greatly to why so many of the XBOX 360 consoles have received the RRoD error.
  The XBOX 360 is a very tightly packed system with many of the components using large amounts of energy and therefore transferring large amounts of heat.
  Unfortunately the tiny little fan at the back of the XBOX 360 isn't enough to cope with all the heat produced.
  The heat that is transferred throughout the system can affect various different components over time.
  
• "Cold" Solder: The solder used when manufacturing the XBOX 360's was a lead free solder.
  This poses several problems as lead free solder becomes brittle, especially when exposed to heat.
  The brittleness of the solder creates a crack between the joint's and the solder weakening the joint overtime until the joint eventually becomes loose.
  Also, the solder was applied at far too low a temperature which meant that air bubbles were left in the connection between the joints and the solder.
  After a lot of use the solder cracks and the joints loosen.
  Both of these soldering problems can cause the Red Ring of Death.
  

Those are two of the most common problems that create the XBOX 360 3 Red Lights issue.
XBOX 360 RRoD Fix