The origin of the soft X-ray emission in obscured Active Galactic Nuclei was still largely unknown before the launch of XMM-Newton and Chandra. However, important progress has been made thanks to the high energy and spatial resolution of these two X-ray missions. We review here the latest results on this issue, focusing on the physical properties of the material responsible for the soft X-ray emission and its relation to the circumnuclear environment. In particular, we show that all pieces of evidence point to a scenario, where this gas is photoionized by the AGN and is spatially coincident with the optical Narrow Line Region.