How to validate an XML file using Java with an XSD having an include?

you need to use an LSResourceResolver for this to work. please take a look at the sample code below.

a validate method:

// note that if your XML already declares the XSD to which it has to conform, then there's no need to declare the schemaName here
void validate(String xml, String schemaName) throws Exception {

    DocumentBuilderFactory builderFactory = DocumentBuilderFactory.newInstance();
    builderFactory.setNamespaceAware(true);

    DocumentBuilder parser = builderFactory
            .newDocumentBuilder();

    // parse the XML into a document object
    Document document = parser.parse(new StringInputStream(xml));

    SchemaFactory factory = SchemaFactory
            .newInstance(XMLConstants.W3C_XML_SCHEMA_NS_URI);

    // associate the schema factory with the resource resolver, which is responsible for resolving the imported XSD's
    factory.setResourceResolver(new ResourceResolver());

            // note that if your XML already declares the XSD to which it has to conform, then there's no need to create a validator from a Schema object
    Source schemaFile = new StreamSource(getClass().getClassLoader()
            .getResourceAsStream(schemaName));
    Schema schema = factory.newSchema(schemaFile);

    Validator validator = schema.newValidator();
    validator.validate(new DOMSource(document));
}

the resource resolver implementation:

public class ResourceResolver  implements LSResourceResolver {

public LSInput resolveResource(String type, String namespaceURI,
        String publicId, String systemId, String baseURI) {

     // note: in this sample, the XSD's are expected to be in the root of the classpath
    InputStream resourceAsStream = this.getClass().getClassLoader()
            .getResourceAsStream(systemId);
    return new Input(publicId, systemId, resourceAsStream);
}

 }

The Input implemetation returned by the resource resolver:

public class Input implements LSInput {

private String publicId;

private String systemId;

public String getPublicId() {
    return publicId;
}

public void setPublicId(String publicId) {
    this.publicId = publicId;
}

public String getBaseURI() {
    return null;
}

public InputStream getByteStream() {
    return null;
}

public boolean getCertifiedText() {
    return false;
}

public Reader getCharacterStream() {
    return null;
}

public String getEncoding() {
    return null;
}

public String getStringData() {
    synchronized (inputStream) {
        try {
            byte[] input = new byte[inputStream.available()];
            inputStream.read(input);
            String contents = new String(input);
            return contents;
        } catch (IOException e) {
            e.printStackTrace();
            System.out.println("Exception " + e);
            return null;
        }
    }
}

public void setBaseURI(String baseURI) {
}

public void setByteStream(InputStream byteStream) {
}

public void setCertifiedText(boolean certifiedText) {
}

public void setCharacterStream(Reader characterStream) {
}

public void setEncoding(String encoding) {
}

public void setStringData(String stringData) {
}

public String getSystemId() {
    return systemId;
}

public void setSystemId(String systemId) {
    this.systemId = systemId;
}

public BufferedInputStream getInputStream() {
    return inputStream;
}

public void setInputStream(BufferedInputStream inputStream) {
    this.inputStream = inputStream;
}

private BufferedInputStream inputStream;

public Input(String publicId, String sysId, InputStream input) {
    this.publicId = publicId;
    this.systemId = sysId;
    this.inputStream = new BufferedInputStream(input);
}
}