We present results of pointed X-ray observations of the accreting jet-driving T Tauri star RY Tau using Chandra and XMM-Newton. We obtained high-resolution grating spectra and excellent-quality CCD spectra and light curves with the objective of identifying the physical mechanisms underlying RY Tau's bright X-ray emission. Grating spectra reveal numerous emission lines spanning a broad range of temperature superimposed on a hot continuum. The X-ray emission measure distribution is dominated by very hot plasma at T_hot ∼ 50 MK, but higher temperatures were present during flares. A weaker cool plasma component is also present as revealed by low-temperature lines such as O viii. X-ray light curves show complex variability consisting of short-duration (∼hours) superhot flares accompanied by fluorescent Fe emission at 6.4 keV superimposed on a slowly varying (∼one day) component that may be tied to stellar rotation. The hot flaring component is undoubtedly of magnetic (e.g., coronal) origin. Soft- and hard-band light curves undergo similar slow variability implying that at least some of the cool plasma shares a common magnetic origin with the hot plasma. Any contribution to the X-ray emission from cool shocked plasma is small compared to the dominant hot component but production of individual low-temperature lines such as O viii in an accretion shock is not ruled out.