Nuke Mircosoft!
No, seriously there is a couple of ways to fix it.
The famous easy trick is the Towel fix.
http://www.gametrailers.com/user-movie/xbox-360-red-ring-towel-fix/93174
But there is the more hands on approach.
http://www.gametrailers.com/user-movie/xbox-360-red-ring-of-death/293647
Of course you can send it off to Microsoft for a warranty repair, but I wouldn't recommend that.
After it's fixed, I recommend that you get a third party cooling unit to make sure it keep from overheating just in case. I believe the one that my friend has is from Nyko and it just hooks on to the bottom of the 360.