The generation of highly charged Xe(q+) ions up to q=24 is observed in Xe clusters embedded in helium nanodroplets and exposed to intense femtosecond laser pulses (λ=800 nm). Laser intensity resolved measurements show that the high-q ion generation starts at an unexpectedly low threshold intensity of about 10(14) W/cm2. Above threshold, the Xe ion charge spectrum saturates quickly and changes only weakly for higher laser intensities. Good agreement between these observations and a molecular dynamics analysis allows us to identify the mechanisms responsible for the highly charged ion production and the surprising intensity threshold behavior of the ionization process.