First and foremost, make sure your hardware is up to the task. If your computer's CPU is at 100%, your memory use is 100% and your disk is thrashing, the computer is more occupied with swapping than working on your program. When running an enterprise application, there is no substute for enterprise-class hardware. Since you want to process gigs of information you probably won't be able to run many other processes on this computer. Especially not CPU-intensive things like web servers or databases.
Next, since you are working with XML you may be using DOM to parse your XML. I've found DOM to be a performance bottleneck and was able to get an order of magnitude better performance by manually parsing XML files. DOM is primarially for the editing of XML, so SAX may be a better alternative in your case (haven't tried it). Are you loading the file into memory, processing it, then writing it out? BAD IDEA for a one gig file unless you have MANY,MANY gigs of physical RAM. DOM loads the entire document into memory and allows one to manipulate it. SAX is event-driven. It processes a subset of the document at a time and generates events so your program can process and write those subsets out to disk, saving valuable resources.
The online book from Sun, Java
Platform Performance, has some good general information for getting the most out of the java api.