In electronics, a decoupling capacitor is a capacitor used to decouple (i.e. prevent electrical energy from transferring to) one part of a circuit from another. Noise caused by other circuit elements is shunted through the capacitor, reducing its effect on the rest of the circuit. For higher frequencies, an alternative name is bypass capacitor as it is used to bypass the power supply or other high-impedance component of a circuit.

Active devices of an electronic system (e.g. transistors, integrated circuits, vacuum tubes) are connected to their power supplies through conductors with finite resistance and inductance. If the current drawn by an active device changes, the voltage drop from the power supply to the device will also change due to these impedances. If several active devices share a common path to the power supply, changes in the current drawn by one element may produce voltage changes large enough to affect the operation of others – voltage spikes or ground bounce, for example – so the change of state of one device is coupled to others through the common impedance to the power supply. A decoupling capacitor provides a bypass path for transient currents, instead of flowing through the common impedance.

The decoupling capacitor works as the device’s local energy storage. The capacitor is placed between the power line and the ground to the circuit the current is to be provided. According to the capacitor current–voltage relation

a voltage drop between a power line and the ground results in a current drawn out from the capacitor to the circuit. When capacitance C is large enough, sufficient current is supplied to maintain an acceptable range of voltage drop. The capacitor stores a small amount of energy that can compensate for the voltage drop in the power supply conductors to the capacitor. To reduce undesired parasitic equivalent series inductance, small and large capacitors are often placed in parallel, adjacent to individual integrated circuits (see § Placement).

In digital circuits, decoupling capacitors also help prevent radiation of electromagnetic interference from relatively long circuit traces due to rapidly changing power supply currents.

Decoupling capacitors alone may not suffice in such cases as a high-power amplifier stage with a low-level pre-amplifier coupled to it. Care must be taken in the layout of circuit conductors so that heavy current at one stage does not produce power supply voltage drops that affect other stages. This may require re-routing printed circuit board traces to segregate circuits, or the use of a ground plane to improve the stability of power supply.

A bypass capacitor is often used to decouple a subcircuit from AC signals or voltage spikes on a power supply or other line. A bypass capacitor can shunt energy from those signals, or transients, past the subcircuit to be decoupled, right to the return path. For a power supply line, a bypass capacitor from the supply voltage line to the power supply return (neutral) would be used.

High frequencies and transient currents can flow through a capacitor to circuit ground instead of to the harder path of the decoupled circuit, but DC cannot go through the capacitor and continues to the decoupled circuit.