An algorithm that turns messages or text into a fixed string of digits, usually for security or data management purposes. The “one way” means that it’s nearly impossible to derive the original text from the string.
A one-way hash function is used to create digital signatures, which in turn identify and authenticate the sender and message of a digitally distributed message.
A cryptographic hash function is a deterministic procedure that takes an arbitrary block of data and returns a fixed-size bit string, the (cryptographic) hash value, such that an accidental or intentional change to the data will change the hash value. The data to be encoded is often called the “message,” and the hash value is sometimes called the message digest or simply digest.
The ideal cryptographic hash function has four main or significant properties:
it is easy (but not necessarily quick) to compute the hash value for any given message
it is infeasible to generate a message that has a given hash
it is infeasible to modify a message without changing the hash
it is infeasible to find two different messages with the same hash
Cryptographic hash functions have many information security applications, notably in digital signatures, message authentication codes (MACs), and other forms of authentication. They can also be used as ordinary hash functions, to index data in hash tables, for fingerprinting, to detect duplicate data or uniquely identify files, and as checksums to detect accidental data corruption. Indeed, in information security contexts, cryptographic hash values are sometimes called (digital) fingerprints, checksums, or just hash values, even though all these terms stand for functions with rather different properties and purposes.
Source:
TIPTON, Hal, (ISC)2, Introduction to the CISSP Exam presentation. and http://en.wikipedia.org/wiki/Cryptographic_hash_function