Can a Linux server serve as a Domain Controller for Windows Machines?

In a small office setup (5-6 employees) we have seven Windows XP and Windows Vista clients, as well as a couple of linux servers.

Is it possible to set up a linux machine to act as the domain controller to provide single signon and AD-like capabilities for the network?

With the versions of Samba found in current versions of common distributions you can certainly have a Linux machine act as an NT-style domain controller (this has been the case for some time).

I believe that taking part in an AD based domain is being actively worked on but not yet ready for production use, though it isn't something I've looked at recently so the support may have moved on.

Samba4 is going to be able to do that, but it's still in alpha. If you're adventurous you can play with the latest releases.

My answer is going to be "why would you want to?" You're probably far better off implementing a Windows DC; it won't cost you that much, and you'll be on a supported and more predictable environment. AD isn't difficult - there's a lot in it, but it's not difficult. So long as you don't do bizarre or wacky stuff with it, it's incredibly robust and has low maintenance overhead. If you want the Linux boxes to authenticate against it, you can set it up in Mixed Mode and it will present itself as an NT4-like DC where appropriate.

Of course you can! Just read a bit some tutorials at samba.org Samba by example is great for a start