IPsec (Internet Protocol Security) is a framework for a set of protocols for security at the network or packet processing layer of network communication. Earlier security approaches have inserted security at the application layer of the communications model. IPsec is said to be especially useful for implementing virtual private networks and for remote user access through dial-up connection to private networks. A big advantage of IPsec is that security arrangements can be handled without requiring changes to individual user computers. Cisco has been a leader in proposing IPsec as a standard (or combination of standards and technologies) and has included support for it in its network routers.
IPsec provides two choices of security service: Authentication Header (AH), which essentially allows authentication of the sender of data, and Encapsulating Security Payload (ESP), which supports both authentication of the sender and encryption of data as well. The specific information associated with each of these services is inserted into the packet in a header that follows the IP packet header. Separate key protocols can be selected, such as the ISAKMP/Oakley protocol.
Officially spelled IPsec by the IETF, the term often appears as IPSec as well as IPSEC.
(This information courtesy of Whatis.com.)
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