We present photometric and spectroscopic observations of the symbiotic binary AX Persei. This system contains a red giant that fills its tidal lobe and transfers material into an accretion disk surrounding a low-mass main-sequence star. The stellar masses- M(g) is similar to 1 M. for the red giant and M(h) is similar to 0.4 M. for the companion-suggest AX Per is poised to enter a common envelope phase of evolution. The disk luminosity increases from L(disk) is similar to 100 L. in quiescence to L(disk) is similar to 5700 L. in outburst for a distance of d = 2.5 kpc. Except for visual maximum, high ionization permitted emission lines-such as He II-imply an EUV luminosity comparable to the disk luminosity. High-energy photons emitted by a hot boundary layer between the disk and central star ionize a surrounding nebula to produce this permitted line emission. High ionization forbidden lines, such as [Fe VII], form in an extended, shock-excited region well out of the binary's orbital plane and may be associated with mass loss from the disk.