A theory (more directly described as a hypothesis, as there is no compelling evidence yet available to support or contradict it) that suggests that the seeds of life are prevalent throughout the cosmos (that is outer space) and life on Earth began by such seeds landing on Earth and propagating. The theory has origins in the ideas of Anaxagoras, a Greek philosopher. (Er, perhaps a philosopher or a cosmologist should comment?)
Today, 2001, the theory is supported by Sir Fred Hoyle.
There is some evidence to suggest that bacteria may be able to survive for very long periods of time even in deep space (and may therefore by the underlying mechanism behind Panspermia). Recent studies out of India have found bacteria at heights greter than 40 km in Earth's atmosphere where mixing from the lower atmosphere is unexpected. However, a consequence of panspermia is that life throughout the universe would have a surprisingly similar biochemistry, being derived from the same ancestral stock. So the high-altitude bacteria might be expected, whether of earth or extra-terrestrial origin, to have a biochemistry similar to terrestrial forms. This is not resolvable until life on another planet can have its chemistry analysed.
Of material definitely known to originate off-earth, analysis of the rock sample known as ALH84001, generally regarded as originating on Mars, suggest it contains artefacts that may have been caused by life forms. This is the only indication of extraterrestrial life to date and is still widely disputed.
Some have taken the theory as an answer to those arguing the improbability of the origin of life, in that wherever life first began, it spread throughout the universe by panspermia.
This theory has been explored in a number of works of science fiction, notably John Wyndham's book The Day of the Triffids, Jack Finney's Invasion of the Bodysnatchers (twice made into a film) and even the Dragonrider books of Ann McCaffrey.