XMM-Newton observed SAX J2103.5+4545 on 2003 January 6, while the Rossi X-Ray Timing Explorer (RXTE) was also monitoring the source. Using the RXTE Proportional Counter Array data set between 2002 December 3 and 2003 January 29, the spin period and average spin-up rate during the XMM-Newton observations were found to be 354.7940+/-0.0008 s and (7.4+/-0.9)x10(-13) Hz s(-1), respectively. In the power spectrum of the 0.9-11 keV EPIC PN light curve, we found quasi-periodic oscillations (QPOs) around 0.044 Hz (22.7 s) with an rms fractional amplitude of similar to6.6%. We interpreted this QPO feature as the Keplerian motion of inhomogeneities through the inner disk. In the X-ray spectrum, in addition to the power-law component with high-energy cutoff and the similar to6.4 keV fluorescent iron emission line, we discovered a soft component consistent with blackbody emission with kTsimilar to1.9 keV. The pulse phase spectroscopy of the source revealed that the blackbody flux peaked at the peak of the pulse with an emission radius of similar to0.3 km, suggesting the polar cap on the neutron star surface as the source of the blackbody emission. The flux of the iron emission line at similar to6.42 keV was shown to peak at the off-pulse phase, supporting the idea that this feature arises from fluorescent emission of the circumstellar material around the neutron star rather than the hot region in the vicinity of the neutron star polar cap.