What is a trojan horse?

In the context of computing and software, a Trojan horse, or simply trojan, is a piece of software which appears to perform a certain action but in fact performs another such as a computer virus. Contrary to popular belief, this action, usually encoded in a hidden payload, may or may not be actually malicious, but Trojan horses are notorious today for their use in the installation of backdoor programs. Simply put, a Trojan horse is not a computer virus. Unlike such malware, it does not propagate by self-replication but relies heavily on the exploitation of an end-user (see Social engineering). It is instead a categorical attribute which can encompass many different forms of codes. Therefore, a computer worm or virus may be a Trojan horse. The term is derived from the classical story of the Trojan Horse.

In the field of computer architecture, 'Trojan Horse' can also refer to security loopholes that allow kernel code to access anything for which it is not authorized.

http://en.wikipedia.org/wiki/Trojan_Horse_%28Computing%29