RC4 is a symmetric, secret key, stream cryptographic cipher designed by Ron Rivest. RC apparently stands for "Ron's Code". Also publicly known are the block ciphers RC2 and RC5, and the block cipher RC6 which he designed with others. RC4 was designed sometime in the 1990s.
RC4 was initially a trade secret, but various people managed to reverse engineer it (in countries where that was legal at the time) and published how it works. So it is no longer a trade secret. The name RC4 is trademarked. The current status seems to be that "unofficial" implementations are legal, but can't use the RC4 name. RC4 has become part of some commonly used encryption protocols and standards, including SSL, that is used for secure network web browsers.
RC4 is initialised from a secret key. Then it generates a "keystream" which is simply XORd with the plaintext to produce the ciphertext. Decryption is exactly the same as encryption.
RC4 is one of the fastest ciphers to be widely used for serious work.
Cryptanalysis of RC4 is at a rather uncertain stage. Theoretical breaks may be possible if gigabytes of known plaintext/known ciphertext stream are available, but this is not necessarily a major problem in practice. In 2001 a new and surprising discovery was made: over all possible RC4 keys, the statistics for the first byte of output keystream are seriously non-random. It remains to be seen if this is an academic curiousity, or a sign of more serious problems to be discovered soon.