Steam is water vapor, often mixed with air or an aerosol of liquid water droplets. This may occur due to evaporation or due to boiling, where heat is applied until water reaches the enthalpy of vaporization. Superheated or saturated steam is invisible; however, wet steam, a visible mist or aerosol of water droplets, is often referred to as "steam".

When liquid water becomes steam, it increases in volume by 1,700 times at standard temperature and pressure; this change in volume can be converted into mechanical work by steam engines such as reciprocating piston type engines and steam turbines. Piston-type steam engines played a central role in the Industrial Revolution^{[citation needed]} and steam-based generation produces 80 percent of the world's electricity. If liquid water comes in contact with a very hot surface or depressurizes quickly below its vapor pressure, it can create a steam explosion.

Steam is traditionally created by heating a boiler by burning coal and other fuels, but it is also possible to create steam with solar energy. Water vapour that includes water droplets is described as "wet steam". As wet steam is heated further, the droplets evaporate, and at a high enough temperature (which depends on the pressure) all of the water evaporates and the system is in vapor–liquid equilibrium. When steam has reached this equilibrium point, it is referred to as "saturated steam".

Superheated steam or live steam is steam at a temperature higher than its boiling point for the pressure, which only occurs when all liquid water has evaporated or has been removed from the system.

Steam tables contain thermodynamic data for water/saturated steam and are often used by engineers and scientists in design and operation of equipment where thermodynamic cycles involving steam are used. Additionally, thermodynamic phase diagrams for water/steam, such as a temperature-entropy diagram or a Mollier diagram may be useful. Steam charts are also used for analysing thermodynamic cycles.

In agriculture, steam is used for soil sterilization to avoid the use of harmful chemical agents and increase soil health.

Steam's capacity to transfer heat is also used in the home: for cooking vegetables, steam cleaning of fabric, carpets and flooring, and for heating buildings. In each case, water is heated in a boiler, and the steam carries the energy to a target object. Steam is also used in ironing clothes to add enough humidity with the heat to take wrinkles out and put intentional creases into the clothing.

As of 2000 around 90% of all electricity was generated using steam as the working fluid, nearly all by steam turbines.