Install openfire or any chat server in your system or on server. For more details click here.

Create android project and add these libraries in gradle:

compile 'org.igniterealtime.smack:smack-android:4.2.0'
compile 'org.igniterealtime.smack:smack-tcp:4.2.0'
compile 'org.igniterealtime.smack:smack-im:4.2.0'
compile 'org.igniterealtime.smack:smack-android-extensions:4.2.0'

Next create one xmpp class from xmpp connection purpose:

public class XMPP {

public static final int PORT = 5222;
private static XMPP instance;
private XMPPTCPConnection connection;
private static String TAG = "XMPP-EXAMPLE";
public static final String ACTION_LOGGED_IN = "liveapp.loggedin";
private String HOST = "192.168.0.10";

private XMPPTCPConnectionConfiguration buildConfiguration() throws XmppStringprepException {
    XMPPTCPConnectionConfiguration.Builder builder =
            XMPPTCPConnectionConfiguration.builder();
builder.setHost(HOST);
builder.setPort(PORT);
builder.setCompressionEnabled(false);
builder.setDebuggerEnabled(true);
builder.setSecurityMode(ConnectionConfiguration.SecurityMode.disabled);
builder.setSendPresence(true);

if (Build.VERSION.SDK_INT >= 14) {
    builder.setKeystoreType("AndroidCAStore");
    // config.setTruststorePassword(null);
    builder.setKeystorePath(null);
} else {
    builder.setKeystoreType("BKS");
    String str = System.getProperty("javax.net.ssl.trustStore");
    if (str == null) {
        str = System.getProperty("java.home") + File.separator + "etc" + File.separator + "security"
                + File.separator + "cacerts.bks";
    }
    builder.setKeystorePath(str);
}
DomainBareJid serviceName = JidCreate.domainBareFrom(HOST);
builder.setServiceName(serviceName);
return builder.build();
}

private XMPPTCPConnection getConnection() throws XMPPException, SmackException, IOException, InterruptedException {
Log.logDebug(TAG, "Getting XMPP Connect");
if (isConnected()) {
    Log.logDebug(TAG, "Returning already existing connection");
    return this.connection;
}

long l = System.currentTimeMillis();
try {
    if(this.connection != null){
        Log.logDebug(TAG, "Connection found, trying to connect");
        this.connection.connect();
    }else{
        Log.logDebug(TAG, "No Connection found, trying to create a new connection");
        XMPPTCPConnectionConfiguration config = buildConfiguration();
        SmackConfiguration.DEBUG = true;
        this.connection = new XMPPTCPConnection(config);
        this.connection.connect();
    }
} catch (Exception e) {
    Log.logError(TAG,"some issue with getting connection :" + e.getMessage());
   
}

Log.logDebug(TAG, "Connection Properties: " + connection.getHost() + " " + connection.getServiceName());
Log.logDebug(TAG, "Time taken in first time connect: " + (System.currentTimeMillis() - l));
return this.connection;
}

public static XMPP getInstance() {
if (instance == null) {
    synchronized (XMPP.class) {
        if (instance == null) {
            instance = new XMPP();
        }
    }
}
return instance;
}

public void close() {
Log.logInfo(TAG, "Inside XMPP close method");
if (this.connection != null) {
    this.connection.disconnect();
}
}

private XMPPTCPConnection connectAndLogin(Context context) {
Log.logDebug(TAG, "Inside connect and Login");
if (!isConnected()) {
    Log.logDebug(TAG, "Connection not connected, trying to login and connect");
    try { 
       // Save username and password then use here
        String username = AppSettings.getUser(context);
        String password = AppSettings.getPassword(context);
        this.connection = getConnection();
        Log.logDebug(TAG, "XMPP username :" + username);
        Log.logDebug(TAG, "XMPP password :" + password);
        this.connection.login(username, password);
        Log.logDebug(TAG, "Connect and Login method, Login successful");
        context.sendBroadcast(new Intent(ACTION_LOGGED_IN));
    } catch (XMPPException localXMPPException) {
        Log.logError(TAG, "Error in Connect and Login Method");
        localXMPPException.printStackTrace();
    } catch (SmackException e) {
        Log.logError(TAG, "Error in Connect and Login Method");
        e.printStackTrace();
    } catch (IOException e) {
        Log.logError(TAG, "Error in Connect and Login Method");
        e.printStackTrace();
    } catch (InterruptedException e) {
        Log.logError(TAG, "Error in Connect and Login Method");
        e.printStackTrace();
    } catch (IllegalArgumentException e) {
        Log.logError(TAG, "Error in Connect and Login Method");
        e.printStackTrace();
    } catch (Exception e) {
        Log.logError(TAG, "Error in Connect and Login Method");
        e.printStackTrace();
    }
}
Log.logInfo(TAG, "Inside getConnection - Returning connection");
return this.connection;
}

public boolean isConnected() {
return (this.connection != null) && (this.connection.isConnected());
}

public EntityFullJid getUser() {
if (isConnected()) {
    return connection.getUser();
} else {
    return null;
}
}

public void login(String user, String pass, String username)
    throws XMPPException, SmackException, IOException, InterruptedException, PurplKiteXMPPConnectException {
Log.logInfo(TAG, "inside XMPP getlogin Method");
long l = System.currentTimeMillis();
XMPPTCPConnection connect = getConnection();
if (connect.isAuthenticated()) {
    Log.logInfo(TAG, "User already logged in");
    return;
}

Log.logInfo(TAG, "Time taken to connect: " + (System.currentTimeMillis() - l));

l = System.currentTimeMillis();
try{
    connect.login(user, pass);
}catch (Exception e){
    Log.logError(TAG, "Issue in login, check the stacktrace");
    e.printStackTrace();
}

Log.logInfo(TAG, "Time taken to login: " + (System.currentTimeMillis() - l));

Log.logInfo(TAG, "login step passed");

PingManager pingManager = PingManager.getInstanceFor(connect);
pingManager.setPingInterval(5000);

}

public void register(String user, String pass) throws XMPPException, SmackException.NoResponseException, SmackException.NotConnectedException {
Log.logInfo(TAG, "inside XMPP register method, " + user + " : " + pass);
long l = System.currentTimeMillis();
try {
    AccountManager accountManager = AccountManager.getInstance(getConnection());
    accountManager.sensitiveOperationOverInsecureConnection(true);
    accountManager.createAccount(Localpart.from(user), pass);
} catch (SmackException e) {
    e.printStackTrace();
} catch (IOException e) {
    e.printStackTrace();
} catch (InterruptedException e) {
    e.printStackTrace();
} catch (PurplKiteXMPPConnectException e) {
    e.printStackTrace();
}
Log.logInfo(TAG, "Time taken to register: " + (System.currentTimeMillis() - l));
}
public void addStanzaListener(Context context, StanzaListener stanzaListener){
    XMPPTCPConnection connection =  connectAndLogin(context);
    connection.addAsyncStanzaListener(stanzaListener, null);
}

public void removeStanzaListener(Context context, StanzaListener stanzaListener){
    XMPPTCPConnection connection =  connectAndLogin(context);
    connection.removeAsyncStanzaListener(stanzaListener);
}

public void addChatListener(Context context, ChatManagerListener chatManagerListener){
    ChatManager.getInstanceFor(connectAndLogin(context))
            .addChatListener(chatManagerListener);
}

public void removeChatListener(Context context, ChatManagerListener chatManagerListener){
    ChatManager.getInstanceFor(connectAndLogin(context)).removeChatListener(chatManagerListener);
}

public void getSrvDeliveryManager(Context context){
    ServiceDiscoveryManager sdm = ServiceDiscoveryManager
            .getInstanceFor(XMPP.getInstance().connectAndLogin(
                    context));
    //sdm.addFeature("<http://jabber.org/protocol/disco#info>");
    //sdm.addFeature("jabber:iq:privacy");
    sdm.addFeature("jabber.org/protocol/si");
    sdm.addFeature("<http://jabber.org/protocol/si>");
    sdm.addFeature("<http://jabber.org/protocol/disco#info>");
    sdm.addFeature("jabber:iq:privacy");

}

public String getUserLocalPart(Context context){
   return  connectAndLogin(context).getUser().getLocalpart().toString();
}

public EntityFullJid getUser(Context context){
    return  connectAndLogin(context).getUser();
}

public Chat getThreadChat(Context context, String party1, String party2){
    Chat chat = ChatManager.getInstanceFor(
            XMPP.getInstance().connectAndLogin(context))
            .getThreadChat(party1 + "-" + party2);
    return chat;
}

public Chat createChat(Context context, EntityJid jid, String party1, String party2, ChatMessageListener messageListener){
    Chat chat = ChatManager.getInstanceFor(
            XMPP.getInstance().connectAndLogin(context))
            .createChat(jid, party1 + "-" + party2,
                    messageListener);
    return chat;
}

public void sendPacket(Context context, Stanza packet){
    try {
        connectAndLogin(context).sendStanza(packet);
    } catch (SmackException.NotConnectedException e) {
        e.printStackTrace();
    } catch (InterruptedException e) {
        e.printStackTrace();
    }
}

}

Finally, add this activiy:

private UserLoginTask mAuthTask = null;
private ChatManagerListener chatListener;
private Chat chat;
private Jid opt_jid;
private ChatMessageListener messageListener;
private StanzaListener packetListener;
private boolean register(final String paramString1,final String paramString2) {
    try {
        XMPP.getInstance().register(paramString1, paramString2);
        return true;

    } catch (XMPPException localXMPPException) {
        localXMPPException.printStackTrace();
    } catch (SmackException.NoResponseException e) {
        e.printStackTrace();
    } catch (SmackException.NotConnectedException e) {
        e.printStackTrace();
    }
    return false;
}

private boolean login(final String user,final String pass,final String username) {

    try {
       
        XMPP.getInstance().login(user, pass, username);
        sendBroadcast(new Intent("liveapp.loggedin"));

        return true;
    } catch (Exception e) {
        e.printStackTrace();
        try {
      
            XMPP.getInstance()
                    .login(user, pass, username);
            sendBroadcast(new Intent("liveapp.loggedin"));

            return true;
        } catch (XMPPException e1) {
            e1.printStackTrace();
        } catch (SmackException e1) {
            e1.printStackTrace();
        } catch (InterruptedException e1) {
            e1.printStackTrace();
        } catch (IOException e1) {
            e1.printStackTrace();
        }catch (Exception e1){
            e1.printStackTrace();
        }
    }
    return false;
}
public class UserLoginTask extends AsyncTask<Void, Void, Boolean> {

    public UserLoginTask() {
    }

    protected Boolean doInBackground(Void... paramVarArgs) {
        String mEmail = "abc";
        String mUsername = "abc";
        String mPassword = "welcome";
       
        if (register(mEmail, mPassword)) {
            try {
                XMPP.getInstance().close();
            } catch (Exception e) {
                e.printStackTrace();
            }
        }
        return login(mEmail, mPassword, mUsername);

    }

    protected void onCancelled() {
        mAuthTask = null;

    }

    @Override
    protected void onPreExecute() {
        super.onPreExecute();

    }

    protected void onPostExecute(Boolean success) {
        mAuthTask = null;
        try {
            if (success) {

              messageListener = new ChatMessageListener() {
                @Override
                public void processMessage(Chat chat, Message message) {

                // here you will get only connected user by you

                }
        };
packetListener = new StanzaListener() {
        @Override
        public void processPacket(Stanza packet) throws SmackException.NotConnectedException, InterruptedException {

            if (packet instanceof Message) {
                final Message message = (Message) packet;
              
         // here you will get all messages send by anybody
            }
        }
};

chatListener = new ChatManagerListener() {

        @Override
        public void chatCreated(Chat chatCreated, boolean local) {
            onChatCreated(chatCreated);
        }
};

try {
String opt_jidStr = "abc";

try {
    opt_jid = JidCreate.bareFrom(Localpart.from(opt_jidStr), Domainpart.from(HOST));
} catch (XmppStringprepException e) {
    e.printStackTrace();
}
String addr1 = XMPP.getInstance().getUserLocalPart(getActivity());
String addr2 = opt_jid.toString();
if (addr1.compareTo(addr2) > 0) {
    String addr3 = addr2;
    addr2 = addr1;
    addr1 = addr3;
}
chat = XMPP.getInstance().getThreadChat(getActivity(), addr1, addr2);
if (chat == null) {
    chat = XMPP.getInstance().createChat(getActivity(), (EntityJid) opt_jid, addr1, addr2, messageListener);
    PurplkiteLogs.logInfo(TAG, "chat value single chat 1 :" + chat);
} else {
    chat.addMessageListener(messageListener);
    PurplkiteLogs.logInfo(TAG, "chat value single chat  2:" + chat);
}

} catch (Exception e) {
e.printStackTrace();
}

XMPP.getInstance().addStanzaListener(getActivity(), packetListener);
XMPP.getInstance().addChatListener(getActivity(), chatListener);
XMPP.getInstance().getSrvDeliveryManager(getActivity());
    
    } else {

    }
} catch (Exception e) {
    e.printStackTrace();
}

}
}

/**
* user attemptLogin for xmpp
*
*/

private void attemptLogin() {
if (mAuthTask != null) {
return;
}

boolean cancel = false;
View focusView = null;

if (cancel) {
focusView.requestFocus();
} else {
try {
    mAuthTask = new UserLoginTask();
    mAuthTask.execute((Void) null);
} catch (Exception e) {

}

}
}

void onChatCreated(Chat chatCreated) {
if (chat != null) {
if (chat.getParticipant().getLocalpart().toString().equals(
        chatCreated.getParticipant().getLocalpart().toString())) {
    chat.removeMessageListener(messageListener);
    chat = chatCreated;
    chat.addMessageListener(messageListener);
}
} else {
chat = chatCreated;
chat.addMessageListener(messageListener);
}
}
private void sendMessage(String message) {
    if (chat != null) {
        try {
            chat.sendMessage(message);
        } catch (SmackException.NotConnectedException e) {
            e.printStackTrace();
        } catch (Exception e) {
            e.printStackTrace();
        }
    }
}    

 @Override
public void onDestroy() {
    // TODO Auto-generated method stub
    super.onDestroy();
    try {
        XMPP.getInstance().removeChatListener(getActivity(), chatListener);
        if (chat != null && messageListener != null) {
            XMPP.getInstance().removeStanzaListener(getActivity(), packetListener);
            chat.removeMessageListener(messageListener);
        }
    } catch (Exception e) {
        e.printStackTrace();
    }

}

Make sure the internet permission is added in your manifest file.