Political corruption is the use of powers by government officials or their network contacts for illegitimate private gain. Forms of corruption vary but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, influence peddling, graft, and embezzlement. Corruption may facilitate criminal enterprise, such as drug trafficking, money laundering, and human trafficking, although it is not restricted to these activities.

Over time, corruption has been defined differently. For example, while performing work for a government or as a representative, it is unethical to accept a gift. Any free gift could be construed as a scheme to lure the recipient towards some biases. In most cases, the gift is seen as an intention to seek certain favors, such as work promotion, tipping in order to win a contract, job, or exemption from certain tasks in the case of junior worker handing in the gift to a senior employee who can be key in winning the favor.

Some forms of corruption, now called "institutional corruption", are distinguished from bribery and other kinds of obvious personal gain. For example, certain state institutions may consistently act against the interests of the public, such as by misusing public funds for their own interest, or by engaging in illegal or immoral behavior with impunity. Bribery and overt criminal acts by individuals may not necessarily be evident but the institution nonetheless acts immorally as a whole. The mafia state phenomenon is an example of institutional corruption.

An illegal act by an officeholder constitutes political corruption only if the act is directly related to their official duties, is done under color of law or involves trading in influence. The activities that constitute illegal corruption differ depending on the country or jurisdiction. For instance, some political funding practices that are legal in one place may be illegal in another. In some cases, government officials have broad or ill-defined powers, which make it difficult to distinguish between legal and illegal actions. Worldwide, bribery alone is estimated to involve over 1 trillion US dollars annually. A state of unrestrained political corruption is known as a kleptocracy, literally meaning "rule by thieves".

Corruption is a difficult concept to define. A proper definition of corruption requires a multi-dimensional approach. Machiavelli popularized the oldest dimension of corruption as the decline of virtue among political officials and the citizenry. The psychologist Horst-Eberhard Richter's modernized version defines corruption as the undermining of political values. Corruption as the decline of virtue has been criticized as too broad and far too subjective to be universalized. The second dimension of corruption is corruption as deviant behavior. Sociologist Christian Höffling and economist J. J. Sentuira both characterized corruption as social illness; the latter defined corruption as the misuse of public power for one's profit. The third dimension is the quid pro quo. Corruption always is an exchange between two or more persons/parties where the persons/parties possess economic goods, and the other person/parties possess a transferred power to be used, according to fixed rules and norms, toward a common good. Fourth, there are also different levels of societal perception of corruption. Heidenheimer divides corruption into three categories. The first category is called white corruption; this level of corruption is mostly viewed with tolerance and may even be lawful and legitimate; typically based on family ties and patron-client systems. The type of corruption often occurring in constitutional states or state transitioning to a more democratic society is called grey corruption is considered reprehensible according to a society's moral norms, but the persons involved are still mostly lacking any sense of doing something wrong. The third category, black corruption is so severe that it violates a society's norms and laws. The final dimension is called "shadow politics"; this is part of the informal political process that goes beyond legitimate informal political agreements to behavior that is purposefully concealed.

Political corruption undermines democracy and good governance by flouting or even subverting formal processes. Corruption in elections and in the legislature reduces accountability and distorts representation in policymaking; corruption in the judiciary compromises the rule of law; and corruption in public administration results in the inefficient provision of services. For republics, it violates a basic principle of republicanism regarding the centrality of civic virtue. More generally, corruption erodes the institutional capacity of government if procedures are disregarded, resources are siphoned off, and public offices are bought and sold. Corruption undermines the legitimacy of government and democratic values such as political trust. Recent evidence suggests that variation in the levels of corruption amongst high-income democracies can vary significantly depending on the level of accountability of decision-makers.

Evidence from fragile states shows that corruption and bribery can adversely impact trust in institutions. Corruption can also impact government's provision of goods and services. It increases the costs of goods and services which arise from efficiency loss. In the absence of corruption, governmental projects might be cost-effective at their true costs; however, once corruption costs are included projects may not be cost-effective so they are not executed distorting the provision of goods and services.

In the private sector, corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with officials and the risk of breached agreements or detection. Although some claim corruption reduces costs by cutting bureaucracy, the availability of bribes can also induce officials to contrive new rules and delays. Openly removing costly and lengthy regulations are better than covertly allowing them to be bypassed by using bribes. Where corruption inflates the cost of business, it also distorts the field of inquiry and action, shielding firms with connections from competition and thereby sustaining inefficient firms.