The photon spectrum in B→Xsγ decay, where Xs is any strange hadronic state, is studied using a data sample of 88.5×106 e+e-→Υ(4S)→BB̅ decays collected by the BABAR experiment at the Stanford Linear Accelerator Center. The partial branching fraction, ΔB(B→Xsγ)=(3.67±0.29(stat)±0.34(syst)±0.29(model))×10-4, the first moment ⟨Eγ⟩=2.288±0.025±0.017±0.015 GeV, and the second moment ⟨Eγ2⟩=0.0328±0.0040±0.0023±0.0036 GeV2 are measured for the photon energy range 1.9 GeV<Eγ<2.7 GeV. They are also measured for narrower Eγ ranges. The moments are then fit to recent theoretical calculations to extract the heavy quark expansion parameters mb and μπ2 and to extrapolate the partial branching fraction to Eγ>1.6 GeV. In addition, the direct CP asymmetry ACP(B→Xs+dγ) is measured to be -0.110±0.115(stat)±0.017(syst).