This document discusses using XSLT to transform XML payloads in Mule applications. It provides an example of transforming an input XML payload containing name and id elements into an output XML payload that adds a designation element. The Mule flow uses an XSLT transformer to apply an XSL stylesheet to the input XML and output the transformed XML. Testing the flow by deploying the application and sending a request demonstrates how XSLT can easily modify XML payloads in Mule.